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    Under Witing

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    san291076
    Underwriting is a contract where an underwriter agrees to purchase any unsubscribed shares or debentures offered by a company. Underwriters are compensated through underwriting commissions. Underwriting provides assurance to companies that they will receive a stipulated funding amount, allowing them to proceed with investment plans regardless of public issue success. There are different types of underwriting including pure, complete, partial, and firm underwriting depending on whether the underwriter agrees to fully or partially subscribe to remaining shares.

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    Under Witing

    Uploaded by

    san291076
    17 views9 pages
    Underwriting is a contract where an underwriter agrees to purchase any unsubscribed shares or debentures offered by a company. Underwriters are compensated through underwriting commissions. Underwriting provides assurance to companies that they will receive a stipulated funding amount, allowing them to proceed with investment plans regardless of public issue success. There are different types of underwriting including pure, complete, partial, and firm underwriting depending on whether the underwriter agrees to fully or partially subscribe to remaining shares.

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    Underwriting is a contract where an underwriter agrees to purchase any unsubscribed shares or debentures offered by a company. Underwriters are compensated through underwriting commissions. Underwriting provides assurance to companies that they will receive a stipulated funding amount, allowing them to proceed with investment plans regardless of public issue success. There are different types of underwriting including pure, complete, partial, and firm underwriting depending on whether the underwriter agrees to fully or partially subscribe to remaining shares.

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    © All Rights Reserved
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    17 views9 pages

    Under Witing

    Uploaded by

    san291076
    Underwriting is a contract where an underwriter agrees to purchase any unsubscribed shares or debentures offered by a company. Underwriters are compensated through underwriting commissions. Underwriting provides assurance to companies that they will receive a stipulated funding amount, allowing them to proceed with investment plans regardless of public issue success. There are different types of underwriting including pure, complete, partial, and firm underwriting depending on whether the underwriter agrees to fully or partially subscribe to remaining shares.

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    of 9

    UNDERWITING

    DEFINITION
    Underwriting may be defined as a contract entered by
    the company with persons or institution called
    underwriters , who undertakes to take up the whole or
    a position of such offered shares or debentures as may
    be subscribed by public.
    UNDERWRITING COMMISSON
    Considering the fact that the underwriters who buys
    unsubscribed shares will be provided with a certain
    amount of commission or say remuneration.
    Thus its called underwriting commission.
    Payment of the commission has to be authorised by
    the articles of association.
    WHY IS UNDERWRITING IMPORTANT ?
    WHAT’S ITS PURPOSE?
    Underwriting acts as a sort of insurance or guarantee
    against the danger of not receiving minimum
    subscription.
    Underwriting function has great economic
    significance. It provides assurance to a company that a
    stipulated amount of a public issue will be definitely
    received.
    This enables the company to go ahead with its
    investment programme without waiting for the
    success of the issues.
    UNDERWRITER
    An underwriter guarantees subscription for a
    company’s shares and debentures. He has personal
    responsibility and potential liability. He takes financial
    risks.
    TYPES
    PURE UNDERWRITING
    Underwriter agrees to subscribe for shares or
    debentures of the company. If the public susbcribes for
    the entire issue.The underwriter has no obligation at
    all.
    TYPES
    Complete underwriting
    Partial underwriting
    COMPLETE UNDERWRITING
    If the whole of the issue of shares or debentures of a
    company is underwritten without involving any firm, it is
    termed as complete underwriting.

    PARTIAL UNDERWRITING
    If only a part of issues of shares or debentures of a company
    is underwritten it is termed as partial underwriting.
    In this the company is treated as underwriter for the
    remaining part of the issue.
    FIRM UNDERWRITING
    Underwriter agrees to buy a definite number of
    shares or debentures in addition to the shares or
    debentures he has to take under the underwriting
    agreement.
    In case of firm underwriting the underwriters get
    priority over the general public , if shares or
    debentures are oversubscribed.
    THANK YOU!

    HOPE YOU UNDERSTOOD


    THE CONCEPT!

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