Underwriting of Securities : Underwriting of Securities PRESENTATION ON Submitted By :-
Anmol A. Bansode.
06. Definition of underwriting : Definition of underwriting Underwriting is an agreement, entered into
by a company with a financial agency, in
order to ensure that the public will
subscribe for the entire issue of shares or
debentures made by the company. Content Of Agreement : Content Of Agreement Period during which agreement is in force.
Amount of Underwriting obligations.
Amount of commission /Details of Arrangement.
Commission may not exceed 5% on shares
and 2.5% in case of debentures.
Underwriters get their commission irrespective. Advantages of Underwriting : Risk and uncertainty of marketing securities.
Intimate and specialized knowledge of capital market.
Provide publicity services to company.
Financing of new enterprises and expansion of existing projects.
It builds up investors' confidence in the issue of securities. Advantages of Underwriting Limitation of underwriting : Limitation of underwriting Very costly method of marketing of securities.
Misuse of such information is possible.
Secure control on the company. Types of underwriting : Types of underwriting Syndicate Underwriting.
Firm Underwriting. Types of underwriters : Types of underwriters Development banks(IFCI, ICICI and IDBI)
Institutional investors(LIC and AXIS)
Financial and development corporations
Investment and insurance companies and stock-brokers Legal Requirement : Legal Requirement A certificate of registration granted by Securities and Exchanges Board of India (Underwriters) Regulations, 1993.
Capital shall not be less than the net worth of 20 lakhs.
Form A and certificate (Form B) is required.
A stock broker or merchant banker acting as an underwriter shall be governed by these regulation in other respects. Registration fee : Registration fee Pay a sum of Rs.5 lakhs as registration fees.
To keep registration shall pay renewal fee of Rs.2 lakhs. Underwriting commission : Underwriting commission Underwriting agency in India : Underwriting agency in India Stock brokers/ consortium of brokers.
Term lending institutions- IDBI, IFCI, IRBI, SFC’s and SIDC’s.
Commercial banks – state bank of India, bank of Baroda, Dena bank, etc.
Investment institutions- LIC, GIC and UTI.
Merchant banking institutions. Thank you : Thank you