What is an Underwriting Agreement?
Underwriting agreements are contractual documents that involve specific covenants between an underwriting group and a corporation that is choosing to issue new securities. Generally, an agent is designated to define the terms of the agreement, along with an authorized representative of the corporation. The underwriting agreement is sometimes referred to as a purchase contract or placing agreement. The main purpose of an underwriting agreement is to clarify all the terms and conditions associated with the underwriting process related to these new securities. To that end, both the corporation and the underwriter will make specific commitments regarding the stock issue. Within the text of the agreement, the rights and responsibilities of both parties will be expressly detailed, so there is no chance of any misunderstanding between the two entities. While some details of an underwriting agreement will vary based on factors as the type of stock issued, the country of origin, and any current
