Are ex-employees subject to a lockup period after an IPO?

Question

Typically there is a 6 month holding period after a company IPO's, before pre-ipo investors and company employees are allowed to sell their shares of stock.
Are ex-employees subject to the same holding period ? (employees that left the company before the IPO, but own pre-ipo stock from exercising options when leaving the company)

Answer 1

The prospectus of an IPO contains information about the Lock-Up period. Companies are not required to have one, but usually do to keep the price from dropping quickly after IPO. The period is usually for 180 days -- but is sometimes shorter or longer.

Most of the agreements state that employees, directors and venture capitalists agree to the lock-up. From the wording, it looks like those who do not agree to the lock-up are not bound by it -- though employees may not agree explicitely.

I doubt that a company can force an ex-employee to agree to the lock-up.

Here is an example of what a prospectus says about lock-ups. As you can see, some employees of this firm were not subject to the lock-up.


Lock-up agreements

Our directors, executive officers, and shareholders, who collectively hold 21,252,405 of the shares of common stock to be outstanding after this offering, have agreed, subject to limited exceptions, not to sell, offer to sell or otherwise dispose of our common stock or securities convertible into or exercisable or exchangeable for our common stock for a period of 180 days after the date of this prospectus without the prior written consent of Bear, Stearns & Co. Inc., on behalf of the underwriters, except Safeguard 98 Capital, L.P. may, pursuant to the terms of a long term incentive plan, transfer approximately 10% of its pre-offering holdings to Safeguard Scientifics' employees, who will not be subject to a lock-up agreement.

Answer 2

Typically NO.
However you might be subject to 30-days if you were a person of importance.