Share Lock Up Agreement

Similarly, company executives and some employees may have received stock options as part of their employment contracts. As in the case of VCs, these employees might be tempted to exercise their options and sell their shares, given that the company`s IPO price would most certainly be much higher than the exercise price of their options. Lock-in agreements are important for investors because conditions can influence the share price. When lock-ups expire, limited people can sell their shares. If a significant number of insiders lose weight, it can lead to a dramatic drop in stock prices. Normally, employees and early investors want shorter lock-ups (so they can pay earlier), while underwriting banks want longer (to deter insiders from flooding the market and lowering stock prices). The company is often somewhere in the middle – it wants to make employees and investors happy, but not that it seems that insiders don`t trust it. These people may include venture capitalists, company directorsA board of directors is essentially a body composed of people elected to represent shareholders. Each public limited company is legally obliged to set up a board of directors; Non-profit organizations and many private companies – although they are not obliged to do so – also create a board of directors, directors, officers, employees, their families and friends. Investors need to know if there is a lock-in agreement, as the probability of a drop in stock prices is high when the lock-in agreement expires.. . .