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Promoter Lock-in Calculation Certificate — SEBI ICDR Regulations 2018

CA-certified promoter lock-in calculation certificate for IPO — mandatory SEBI ICDR compliance covering 18-month lock-in on minimum 20% promoter contribution, 6-month lock-in on excess holding, pre-IPO share lock-in under Regulations 16–19, and lock-in release schedule for the prospectus.

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STARTING FROM₹19,999
TYPICAL TIMELINE14 days
DOCS REQUIRED4 documents
APPLICABLE TOCompany

Regulatory Framework

SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018: Regulation 16 — Minimum Promoter Contribution (MPC): 20% of post-issue paid-up capital; locked-in for 18 months from allotment date; ineligible shares: gifted shares, bonus on ineligible shares, shares not held for at least 1 year before filing. Regulation 17 — Excess Promoter Holding: promoter shares exceeding MPC locked-in for 6 months from allotment date. Regulation 18 — Pre-IPO shares held by other than promoters offered in OFS: 6-month lock-in from allotment date. Regulation 19 — Lock-in conditions: locked-in shares may be pledged only as collateral for loans from scheduled commercial banks or public financial institutions for business purposes, subject to specific conditions.

Overview

Promoter lock-in is one of the most mechanically precise computations in an IPO transaction, and a CA-certified lock-in calculation certificate is a mandatory disclosure in the DRHP and Red Herring Prospectus (RHP) under SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018.

Chapter IV of the SEBI ICDR Regulations, 2018 governs promoter lock-in for IPOs. The key provisions are:

Regulation 16: Minimum Promoter Contribution (MPC) — Promoters must contribute at least 20% of the post-issue paid-up share capital. This 20% is locked-in for 18 months from the date of allotment. The MPC calculation must identify which promoter shares and/or fresh issue shares constitute the 20%, and must exclude shares acquired through gifts, bonus shares on ineligible shares, or shares on which the promoter paid no consideration.

Regulation 17: Excess Promoter Holding — Any promoter holding in excess of the minimum 20% is locked-in for 6 months from the date of allotment.

Regulation 18: Pre-IPO Shares — All equity shares held by persons other than promoters (i.e. public shareholders pre-IPO) that are allotted before the IPO and are being offered in an offer for sale (OFS) are locked-in for 6 months from the date of allotment.

Regulation 19: Conditions for Lock-in — Locked-in shares may be pledged only as a collateral for loans from scheduled commercial banks or public financial institutions for the purpose of business, subject to the condition that the pledge of such shares is one of the terms of sanction of such loan.

The CA's lock-in certificate must: (i) list each promoter and their pre-IPO shareholding; (ii) identify the shares constituting MPC (including their acquisition history and cost); (iii) classify shares into 18-month lock-in (MPC) and 6-month lock-in (excess); (iv) verify that no MPC shares are ineligible (gifts, bonus on ineligible); (v) confirm the lock-in release dates; and (vi) be certified on the date of the filing of the DRHP and updated in the RHP at the time of pricing.

How It Works

  1. 1

    Promoter Shareholding Data Collection & CAP Table Review

    Obtain the complete cap table — promoter shareholding as on date, allotment history (date, price, consideration), bonus share history, shares acquired through gifts or non-cash consideration. Verify against the RoC filings (MGT-7, PAS-3, SH-3).

    Government2-3 days
  2. 2

    MPC Identification — Eligible vs Ineligible Shares (Regulation 16)

    Identify the shares constituting Minimum Promoter Contribution (20% of post-issue capital). Test each block of shares for eligibility: acquired for cash consideration, not gifted, not bonus on ineligible shares, held for at least 1 year before filing. Classify eligible and ineligible shares per Regulation 16.

    Government3-5 days
  3. 3

    Lock-in Classification — 18-Month vs 6-Month (Regulations 16–18)

    Classify all promoter shares: eligible MPC shares → 18-month lock-in from date of allotment (Regulation 16); excess promoter shares → 6-month lock-in (Regulation 17); pre-IPO public shares in OFS → 6-month lock-in (Regulation 18). Document the rationale for each classification.

    Government2-3 days
  4. 4

    Lock-in Release Schedule — Date-wise Computation

    Compute the lock-in release dates for each tranche of promoter shares. Prepare the lock-in release schedule table for inclusion in the DRHP/RHP. Account for any post-DRHP bonus issues or share splits that may proportionately adjust lock-in quantities.

    Government1-2 days
  5. 5

    CA Lock-in Certificate — DRHP & RHP Version

    Issue the CA-certified lock-in calculation certificate for inclusion in the DRHP. Issue the updated RHP version at pricing, reflecting the actual allotment date and revised release dates. Certify that all lock-in computations are in compliance with SEBI ICDR Regulations 16 to 19.

    Government2-3 days

Frequently Asked Questions

What is Minimum Promoter Contribution (MPC) and why must it be CA-certified?
Minimum Promoter Contribution (MPC) under Regulation 16 of SEBI ICDR Regulations, 2018 requires promoters to hold at least 20% of the post-issue paid-up share capital, which must be locked-in for 18 months from the date of IPO allotment. The CA-certified MPC certificate is mandatory because SEBI requires independent verification that: (i) the shares constituting the 20% are eligible (paid in cash, not gifted, not bonus on ineligible shares, held for at least 1 year before DRHP filing); and (ii) the calculation of 20% is correct as a percentage of the post-issue capital including fresh issue and OFS.
What happens to promoter shares above the 20% MPC threshold?
Promoter shareholding in excess of the Minimum Promoter Contribution (MPC) of 20% is subject to a 6-month lock-in from the date of allotment under Regulation 17 of SEBI ICDR Regulations, 2018. So if a promoter holds 60% of the post-issue capital, 20% is locked for 18 months and 40% is locked for 6 months. The CA's lock-in certificate must classify each share block accordingly and provide the release dates for both tranches.
Which promoter shares are ineligible for Minimum Promoter Contribution?
Under Regulation 16 of SEBI ICDR Regulations, 2018, the following shares are ineligible for inclusion in the MPC: (i) shares acquired by way of gift (no consideration paid by the promoter); (ii) bonus shares issued on ineligible shares; (iii) shares for which no consideration was paid (including those acquired under ESOPs without full market value payment); and (iv) shares not held for at least 1 year before the date of filing the DRHP. The CA verifies each share allotment in the promoter's history.
Can locked-in promoter shares be sold or pledged?
No, locked-in shares cannot be sold or transferred during the lock-in period. They may, however, be pledged as collateral under Regulation 19 of SEBI ICDR Regulations, 2018, subject to two conditions: (i) the pledge is to a scheduled commercial bank or public financial institution; (ii) the purpose of the loan is for business (not personal use). Any pledge must be disclosed in the offer document.
How does a bonus issue after the DRHP filing affect the lock-in calculation?
If a bonus issue is made after the DRHP filing date but before allotment, the bonus shares issued on locked-in shares are also subject to lock-in. Regulation 16(3) of SEBI ICDR Regulations provides that shares allotted pursuant to a bonus issue out of free reserves or share premium from cash inflows on locked-in shares are also locked-in for the same period as the original shares on which the bonus was issued. The CA must update the RHP lock-in certificate to reflect the bonus shares and revised lock-in quantities.

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