Lock-In Period
Also called: Share Lock-Up · Transfer Moratorium
A lock-in period is a defined window during which a shareholder — commonly a founder — cannot sell or transfer their shares at all, regardless of any buyer. It's distinct from vesting, which governs whether unearned equity can be forfeited, not whether already-owned shares can be sold.
In more detail
Lock-in periods are common immediately after a funding round (protecting the new investor from a founder cashing out right away) or after an IPO (a "lock-up" preventing early shareholders from selling immediately and depressing the newly public stock price).
The distinction from vesting matters: vesting is about whether you've earned the right to keep equity at all, over time. A lock-in period assumes the shares are already owned and vested — it's a pure restriction on liquidity, not on ownership.
The length and any exceptions (transfers to affiliates, estate planning, a limited annual sell-down allowance) should be proportionate to what the lock-in is actually protecting against.
Following a Series A round, founder shares are subject to a 12-month lock-in during which they cannot be sold to any party, even though the shares themselves are fully vested and owned — the restriction is purely about timing of liquidity.
What our lawyers check
- Length of the lock-in period and what triggers its start
- Whether any exceptions exist (affiliate transfers, estate planning)
- How the lock-in interacts with vesting — both may apply to the same shares
- Whether the restriction is proportionate to the event it's protecting (financing round, IPO)
Contracts where this clause matters
Related terms
This definition is general information about commercial contracting practice, not legal advice. How a clause operates depends on the specific wording of your agreement and the law that governs it. For advice on your contract, have it reviewed by a lawyer.
All glossary terms