TITLE LOREM

IPSUM
Sit Dolor Amet
 Title Lorem Ipsum

LOREM IPSUM DOLOR SIT AMET, NUNC VIVERRA IMPERDIET PELLENTESQUE HABITANT
CONSECTETUER ADIPISCING ENIM. FUSCE EST. VIVAMUS A MORBI TRISTIQUE SENECTUS ET
ELIT. TELLUS. NETUS.
Meaning - underwriting

◦ Underwriting is an agreement,under which one or more

persons or institutions called underwriter or
underwriters, agree to take up the whole or certain
portion of a company's un subscribed shares or
debentures, for certain remuneration called
commission.
SEBI Regulations regarding Underwriting
◦ No person other than a share broker or merchant banker can act as underwriter unless he holds a certificate granted by SEBI.
◦ The following disclosures should made in the offer document :
1. Name and address of the underwriters and the amount underwritten by them.
2. Declaration by the board of directors ( BOD) of the issuer company that the underwriters have sufficient resources to
discharge their respective obligations.
Underwriting commission
◦ Meaning of underwriting Commission.
◦ The underwriters are entitled to some consideration for the risk they undertake in underwriting the shares or debentures of a
public company.

◦ In the words, the consideration payable to the underwriters for underwriting the shares and debentures is called the
underwriting commission
RATES OF UNDERWRITING COMMISSION
◦ As per Companies Act 2013, the underwriter’s commission should not be more than 5% of the issue price of shares and 2.5%
of the issue price of debentures.

◦ As per the guidelines issued by the Ministry of Finance, the following rates are to be followed:
◦ On the issue of shares – 2.5%
◦ On the issue of debentures:
1. Upto 500000 – 2.5%
2. Excess to Rs. 500000 – 2%
Meaning of underwriters

◦ The underwriters may be individuals, partnership

firms, joint stock companies, banks and financial
institutions. Ex : ICICI, SFC’s, LIC etc.,
Advantages of underwriting
◦ 1. UNDERWRITING ENSURE THE SUCCESS OF THE PROPOSED ISSUE OF SHARES.
◦ UNDERWRITING HELPS A COMPANY TO GET A MINIMUM SUBSCRIPTION
◦ WITH AN UNDERWRITING AGREEMENT, A COMPANY NEED NOT BOTHER ABOUT MONEY MARKET
CONDITIONS.
◦ WHEN AN UNDERWRITING AGREEMENT EXISTS, A COMPANY IS RELIEVED OF THE BURDEN OBTAINING
THE REQUIRED CAPITAL
TYPES OF UNDERWRITING
MARKED AND UNMARKED
APPLICATIONS
LIABILITY OF UNDERWRITERS