Underwriting agreement

Underwriting agreement,

Definition of Underwriting agreement:

  1. An underwriting agreement is a contract between a group of investment bankers who form an underwriting group or syndicate and the issuing corporation of a new securities issue.

  2. The purpose of the underwriting agreement is to ensure that all of the players understand their responsibility in the process, thus minimizing potential conflict. The underwriting agreement is also called an underwriting contract.

  3. Securities-purchase contract between an underwriter or underwriting syndicate and an issuer of bonds or shares. Among other terms, it specifies the price at which the security will be offered to the public (public offering price), underwriters profit margin (underwriting spread), and the date by which the payments must be settled (settlement date).

How to use Underwriting agreement in a sentence?

  1. The contract outlines the underwriting group's commitment to purchase the new securities issue, the agreed-upon price, the initial resale price, and the settlement date.
  2. An underwriting agreement takes place between a syndicate of investment bankers who form an underwriting group and the issuing corporation of a new securities issue.
  3. The agreement ensures everyone involved understands their responsibility in the process.

Meaning of Underwriting agreement & Underwriting agreement Definition