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Slide 1: 



Meaning: A guarantee given by underwriters to take up whole or part of the issue of securities not subscribed by the public. Indian Scenario In 1912 started. Tata started first in 1937 – Investment corp. of India Ltd. Became popular after1955 – ICICI Later – LIC, IDBI, UTI took active part in underwriting new issues. UNDERWRITING ARANGEMENTS

Types of Underwriters:- : 

Firm underwriting Sub-underwriting Joint underwriting and Syndicate underwriting Functions:- Obstacles:- Adequate funds 1. Chaotic capital market Expert advice 2. Slow Industrialization Enhanced goodwill 3. Managing agency system Assurance to investors 4. Bashful investors Better marketing 5. Lack of specialized institutions Benefits to buyers and 6. unsuccessful corporate Price stability Types of Underwriters:-

Underwriter : 

The financial services intermediary who arranges for underwriting function is called as underwriter. Who acts as an underwriter? National financial institutions Commercial banks Merchant bankers and Members of stock exchange Who arranges the underwriter? Lead managers Underwriter

Slide 5: 

Factors considered while selecting underwriters:- Financial strength Experience in the primary market Past underwriting performance and defaults if any Network of investor clientele and Overall reputation By underwriters:- Company’s standing & records Competence of the mgt. Objectives of the issue Project details Offer price Terms of issue and Off- B/S liabilities

Underwriting agreement:- : 

A contract between an underwriter and the company issuing capital with regard to the commitment for subscription of securities is known as ‘underwriting agreement’. while arrangements – The resources of the underwriters and The marketing aspects of the issue are kept in mind Underwriting agreement:-

SEBI Guidelines : 

The important guidelines regulating underwriting as a financial services – Optional Number of underwriters Registration Obligations Sub-underwriting Underwriting commission In respect of equity shares – 2.5% for both In respect of preference, CDs & NCDs Upto Rs.5 lk – 2.5% on amount devolving on underwriters & 1.5% on amount subscribed by public over Rs.5 lk – 2% & 1%. SEBI Guidelines

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