Article shared by Rohan Khanna

The Three primary kinds of underwriting contracts are:

i) Complete underwriting. When the whole issue of shares or debentures of the clients are underwritten, it’s known as complete underwriting. In this situation the entire concern is underwritten either by a personOrestablishment saying yes to accept entire risk or by a few firms or institutions each saying yes to accept risk to some limited extent.

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ii) Partial underwriting. If area of the issue of shares or debentures of the clients are underwritten, it’s stated to become partial underwriting. In this situation negligence the problem is underwritten either by a personOrestablishment or by a few firms or institutions each saying yes to accept risk to some limited extent.

iii) Firm underwriting. Firm underwriting means when an underwriter concurs to purchase an absolute quantity of shares or debentures additionally towards the shares or debentures he needs to take underneath the underwriting agreement. In situation of firm underwriting the underwriters get concern is over subscribed, the underwriters are liable to consider the agreed quantity of shares or debentures.

Before discussing at length tell us concerning the disclosure needs:

The provisions from the Companies Act, 1956 regarding disclosure of underwriting agreement are listed below:

1. Disclosure within the Prospectus. Where any risk of shares or debentures is underwritten, what they are called from the underwriters and also the opinion from the company directors the sources from the underwriters are sufficient to release their obligations ought to be specified by the prospectus.

According to provisions of Section 76 from the Companies Act, 1956, the amount of shares or debentures that the underwriters have decided to subscribe combined with the amount or rate of commission payable for them ought to be disclosed within the prospectus or statement instead of prospectus, because the situation might be.

2. Disclosure in Statutory Report. It shall put down the extent, or no, that each underwriting contract, or no, is not transported out and also the reasons therefore.

3. Disclosure of sums payable. All sums payable by commission and brokerage etc. should be disclosed within the Balance Sheet, underneath the heading Miscellaneous Expenditure according to needs of Schedule Mire from the Companies Act.