Characteristics And Duties Of An Underwriters Counsel

By Annabelle Holman


To be able to fund a certain project, corporations would have to borrow money in order to have the needed amount. Companies, businesses, and the government resort to issuing securities. These securities are offered to the public. A certain amount of money to be received by the purchaser as well as the due date for the repayment are usually stated in these securities.

Instead of companies selling the bonds directly to the public, they employ an underwriting firm to do the job for them. The underwriter has the ability to market the securities to those who are ready to purchase them. An underwriters counsel will be formed by this firm. It will act as representatives of the firm in the transaction. Several duties will guide the group in seeing to it that the transaction is smooth.

Adequate knowledge and the required expertise for the agreement are attributes that the group should have. They need to provide assurance to the issuing company that they understand the job that they need to perform. For these transactions, an extensive experience regarding the field is certainly important. Conflicts of interests should be avoided so that the representatives can do their tasks.

Aside from these, they are also required to uphold the privacy of the financial position of the organization issuing the bonds. They should be able to have a good analysis as to the financial position of the issuer. Wrongful representation of the position of the said company may provide certain risks to both the issuing company and that of the underwriter that they are representing.

There are a lot of duties and tasks that can be delegated to the group. An agreement between the issuing company and the underwriter can be the source of these duties. One thing that the counsel needs to do is formulate the disclosure statements of the issuing company and review them. This is important as the statements specify the interest rates and other financial topics.

To be able to complete the transaction, legal roadblocks should be prevented. Because of this, the lawfulness and legality of the transaction should be evaluated. The representatives have to see to it that the bonds meet and comply with the regulations set by the government who has jurisdiction of the trade agreement. They need to have thorough examination of the said bonds.

Bond purchase contracts are usually prepared and drafted by this group. These contracts include the reason of the issuance of the bonds, the payment scheme, and the financial condition of the corporation issuing them and its ability to repay the purchaser at a future date. The contracts serve as a guarantee of the issuer to the purchasers.

Written agreements will also be prepared and drafted. The agreement should have the terms negotiated and approved by both the underwriting firm and the client. In case a bid for the transaction is being held where a number of underwriters are participating, the group may also have to draft an agreement among these underwriters.

Effective and constant communication should be a priority. Representatives and the underwriting organization should be able to communicate with each other. With this, all those involved in the transaction will be able to reach their objectives.




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