Underwriter - Definition - Law Dictionary Home Dictionary Definition underwriter

Definition :

Underwriter, an insurer of ships, so called from his writing his name under the policy of insurance. See INSURANCE.

Also subscribers (generally before a public issue by the company) offering to take all or a stated amount of the shares offered to and not taken up by the public. The sole consideration allowed is a commission at a rate which must be disclosed in the prospectus and not exceeding the rate authorized by the Articles of Association. This commission must not be confused with brokerage which companies are allowed to pay for placing their shares. [see (English) Companies Act, 1929, ss. 35 and 355, 4th Sch. (10)]

A bona fide invitation to enter into an underwriting agreement does not require a prospectus within the meaning of s. 35 (ibid.). see PROSPECTUS.