, the underwriters want to secure a block of shares in the company as ordinary subscribers even if the share issue is fully subscribed by the public. In that case the underwriters have to apply firm for a specified number of shares to be allotted to them as ordinary subscnbers, in addi non to their undertakmg to underwrite the whole or part of the issue: A clause to that effect is included in the Underwriting Agreement under which they authonse the company to allot them the specified number of shares as per their 'firm' offer When such a clause is included in the mlderwriting agreement, the undenvriters are assured of securing allotment of at least the shares for which they applied f I rm, even if the share issue is fully subscribed by the public and they are not called upon to take up the umsubscribcd portion. Specimen :
A typical Underwriting Agreernent IS givet below for a clear understanding of its nature:
76 KlNG'S: SECRETARlAL PRACTlCE
i riot of hich m.rked has been submitted to the' e.= =Now it is hereby agreed and declared as follows:
I 'hi t the Cmnpany shall not later that the 1 5th day of Noveml: N make the said offer to tlie pubic for subscription of the said 50.00l shares of As 10 each in terms of a prospectus substantially in accoroa with the proof print marked 'Underwriters' Proof herein before reterre; to
2 The Underv nters m cmnsideratim of the commission hereinaf er mentioned and provided that the said offer be made on or before tt.e 15tn day of NovetntDer 2000 hereby underwrite and according shall prior to 5 p m. on the day such offer is advertised apply for the whole of the said 50 000: Equity Shares on fhc terms of the said prospectus as advertised and pay the deposit thereon payable on application and in default of -I e underwriters in so dolt g the Company may put in an application for and of the said equity shares not so applied for signed en behalf of the Underwriters by any person Appointed by the Company fbr the purpose anti may allot on any such applioatmn so put in and such application and allotment shall be binding ul on the underwrite I
i if the whole of the said 50.000 equity Shares are applied for by the public on the said prospectus w1 ilst the subscription list remains open the Under Nqiter shall not be allotted any of the s.ud equity shares so applied lior by the public the balance unapplied for shall only be allotted to the Underwritten. In the number of shares applied for-by the
'public for the purpose hereof applications withdrawn before allotment of shares objected to by the Company shad not be counted
lo consideration of the obli &atimn of the Underwriters hereunder the Cmnpanv shall pay to the Underv riters a corm is6ibn to include under vriting at the rats of 1 5% on the total nominal amount of the 5C OOO equity share3hereby under written.
: Tbc printing circulating publication advertising and is6uc of the pm.pectus offering the said 50 000 shares of the Company to the public fm s ubscri lgion shall be undertaken by the Under N riters and the Company shall in consideration of their cervices m the connection pay to the Underwniters ail fees and expenses incurred by the Underwritem in conneetim the ewith provided that tl.e total liabihty of the Compan thcretbr shall not exceed the sum of Rs. 15 000 and in addition to be runmult of such fees and eat erases as aforesaid the Crmpany shall
hi witness whereof the parties hereto set their hands and seals
INCORPORATlON OF A COMPANY I 77
DRAFTING OF MEMORANDUlYl OF ASSOCIATION
Q. 10. State the contents of Memorandum of Association. Explain the procedure for the alteration of the registered of flee of the Company.
(Delhi Univ., 1990, 1994) Or
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