Some shareholders are not deciding whether to sell. They are legally prevented from selling until a date, and in some cases legally required to sell by a date. A newly listed company can have most of its share capital immobilised on the day it lists and a materially larger tradeable float six months later, without a single share being issued. Understanding a company's ownership means knowing which shares can move and when — and that is written into the offer document and the regulations, not inferred.
A platform looks empty at half past nine. It is not that nobody wants to travel; it is that the train is at ten and everybody is still in the waiting room. Anyone judging demand for that route from the empty platform at half past nine has confused a timetable for an absence of people.
A locked-in shareholder is in the waiting room. The absence of selling before the lock-in expires says nothing about their intention. The timetable is published, and reading it tells you when a large, price-insensitive seller becomes able to act.
The lock-in calendar for a newly listed company
| Who | Lock-in under the SEBI ICDR Regulations | Counted from |
|---|---|---|
| Anchor investors — first half | 30 days on 50% of the shares allotted | Date of allotment |
| Anchor investors — second half | 90 days on the remaining 50% | Date of allotment |
| Promoters — minimum contribution | 18 months on 20% of the post-issue capital; three years where the majority of the fresh issue proceeds are for capital expenditure | Date of allotment |
| Promoters — holding above the minimum | Six months on the excess; one year where the majority of the fresh issue proceeds are for capital expenditure | Date of allotment |
| Other pre-issue shareholders | Six months on the entire pre-issue capital, with specified exemptions | Date of allotment |
The other deadline: minimum public shareholding
Rule 19A of the Securities Contracts (Regulation) Rules, 1957 requires every listed company to maintain a public shareholding of at least 25%. A company whose public float falls below that — because promoters were allotted shares, because a preferential issue changed the arithmetic, or because it listed with a smaller float under a permitted timeline — has to bring it back to 25% within twelve months of the fall, in the manner and within any extended time SEBI specifies. That is a seller who is not choosing, and the size of the required sell-down is a subtraction anyone can do from the quarterly shareholding pattern.
- The methods are prescribed. SEBI has specified the routes — an offer for sale through the stock exchange mechanism, an institutional placement programme, a qualified institutions placement, a rights or bonus issue with the promoter renouncing entitlement, and sale of a limited quantity in the open market — so the manner of the sell-down is not open-ended either.
- The gap is measurable today. Public shareholding is in the quarterly filing under Regulation 31 of the Listing Obligations and Disclosure Requirements Regulations. If it reads 21.4%, at least 3.6% of the company has to change hands before the deadline.
- Newly listed large companies get a staggered path. Where an issuer lists with less than 25% public shareholding under the permitted route, the regulations set out a timeline to reach the threshold rather than requiring it at listing.
- Listed public sector companies have repeatedly been given extended deadlines by government notification, so the rule applies but the clock for state-controlled issuers can be reset in a way it cannot be for anyone else.
- It cuts both ways. A forced sell-down permanently increases the free float, which affects index eligibility and index weights, and index inclusion brings its own set of buyers who are equally price-insensitive.
What this is, and what it is not
- How much of the share capital is currently immobilised
- When the tradeable float mechanically increases
- That a particular seller is acting on a legal deadline rather than a view on value
- Where a change in free float may affect index eligibility
- That supply on a given date has an explanation unrelated to the business
- Whether any locked-in holder actually intends to sell
- What price the shares will trade at on or after the expiry
- Whether the business has changed in any way
- How much was already anticipated and reflected in the price
- Anything at all about whether the company is worth owning
Other dated supply worth knowing about
- 1Employee stock option vesting
Vesting schedules and outstanding options are disclosed in the annual report and the ESOP note. Exercise creates new shares and dilutes existing holders, on a schedule that is set years in advance.
- 2Pledged promoter shares
The quarterly shareholding pattern discloses the encumbered portion of promoter holding. A pledge invoked by a lender produces a seller with no discretion at all, and no notice.
- 3Open offer and delisting timelines
A substantial acquisition triggers an open offer under the Takeover Regulations, with a prescribed timetable. A delisting offer runs its own reverse book-building process on a published calendar.
- 4Index rebalancing
Index providers publish their methodology and their review dates. Inclusion or exclusion produces buying or selling from funds tracking the index, on a known day, for reasons that have nothing to do with the company's results.
- 5Bulk and block deals
Exchanges publish bulk deal and block deal data daily, so a large sale becomes public the same evening. That is confirmation after the fact, and it is how you check whether an expiry actually produced selling.
A company listed 40 days ago. Its offer document shows a large anchor allocation and pre-issue shareholders holding most of the capital. What does the lock-in calendar imply?
Sadhe nau baje platform khaali dikhta hai. Log nahi hain aisa nahi — gaadi das baje hai aur sab waiting room mein baithe hain. Lock-in mein bandha shareholder wahi waiting room hai — abhi nahi bech raha kyunki bech hi nahi sakta, iraade ka isse koi pata nahi chalta. Time-table offer document mein chhapa hua hai; padh lena kaafi hai.
- Anchor lock-ins release in two tranches, at 30 and 90 days from allotment.
- Pre-issue capital is locked six months; promoter minimum contribution 18 months or three years.
- Rule 19A requires 25% public shareholding, and a shortfall must be sold down.
- The quarterly shareholding pattern shows the gap, the pledge and the float today.
- This describes supply and ownership structure, not what a share is worth.
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Common questions
Short, direct answers to what people ask about this topic.