1. UNDERWRITING
A marketing strategy corporate enterprises are able to sell their securities to the public
Agreement between the issuing company & the financial intermediary, whereby sale of certain quantum of securities is guaranteed for the issuing company.

2. Underwriting Types
Firm Underwriting: Underwriter agrees to take up a specified number of securities
Sub-Underwriting: Underwriting of securities is contracted out by the main underwriter to other underwriting intermediaries for a commission.
Joint Underwriting: Securities underwritten by two or more underwriting intermediaries jointly.

3. Underwriting Agencies
Private Agencies: M/s Dalal and Co., M/s Kothari & Co. etc
Investment Companies: Industrial Investment Trust of Bombay, Devkaran Nanji Investment Co. and Investment Trust of India Ltd.
Commercial Banks
DFI’s: LIC, IFCI, ICICI, IDBI, UTI etc.

4. Underwriter
Factors to be taken into consideration while selecting underwriter:
Financial Strength
Experience in primary Market
Past underwriting performance & defaults if any
Overall reputation of the underwriter.

5. Factors to be taken into consideration while selecting the company
Company’s standing & record
Competence of the management,
Objectives of the issue
project details
offer price
other terms of the issue etc.

6. SEBI Guidelines
Optional: Issue is not underwritten & 90 percent of the amount is not collected, amount will be refunded.
Number of underwriters: Lead Manager must satisfy themselves about the net worth of the underwriters & outstanding commitments & disclosing the same to the SEBI.

7. Registration: Underwriting firm must registered with SEBI & having a minimum net worth of Rs.20 Lakh.
Obligations: Should not exceed 20 times an underwriters networth.

8. Underwriting Commission
No underwriting commission is payable on the amount taken up by promoters, employees, directors and their friends & Business associates.
Commission is to be paid within 15 days of finalization of allotment.

9. Underwriting Commission
In case of equity shares, 2.5% commission on the amount devolving on underwriter & amount subscribed by the public.
In respect of preference, Convertible & Non-Convertible Debentures
a) Underwriting upto Rs.5lakh, 2.5% comm. on the amount devolved by the underwriter & 1.5% on the amount subscribed by the public.

10. b) Underwriting exceeding Rs. 5lakh, 2%comm
b) Underwriting exceeding Rs.5lakh, 2%comm. For the amount devolving on underwriter & 1% on the amount subscribed by the public.