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The Underwriting Agreement is between the Underwriter and issuer company for the proposed SME IPO. Underwriting is mandatory for shares listed on the SME Platform.
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Content:
UNDERWRITING AGREEMENT
FOR INITIAL PUBLIC ISSUE OF
----------------------
DATED [------------------------]
AMONGST
-------------------------------
(Issuer Company)
AND
ABC Private Limited
(Underwriter)
This Underwriter agreement is made and entered into at -------- on this ---------------- between:
In this Underwriting Agreement Issuer Company, Lead Manager &Underwriter are hereinafter collectively referred to as the "Parties" and individually as a "Party"
WHEREAS:
NOW, THEREFORE IT IS HEREBY AGREED BY AND AMONG THE PARTIES HERETO AS FOLLOWS:
1.1 In addition to the defined terms contained elsewhere in the Agreement, the following expressions, as used in this Agreement, shall have the respective meanings set forth below:
"Affiliates" with respect to any person means (a) any persons that directly or indirectly, through one or more intermediaries, control or are controlled by or are under common control with, the specified person.
"Allotment" shall mean the issue and allotment of Issue Shares pursuant to the Public Issue.
"Agreement" shall mean this agreement or any other agreement as specifically mentioned.
"Application" shall mean an indication to make an offer during the Application Period by a prospective investor to subscribe to the Offer shares at the Issue Price, including all revisions and modifications thereto.
"Application Amount" shall mean the Issue Price indicated in the Application Form and payable by an Applicant on submission of the Application in the Offer.
"Application Form" shall mean the form in terms of which the Applicant shall make an offer to subscribe to the Offer shares and which will be considered as the application for Allotment of the Offer Shares in terms of the Draft Prospectus and/or the Prospectus
"Applicant" shall mean any prospective purchaser who has made an application in accordance with the Draft Prospectus and/or the Prospectus.
"Application" shall mean the form in terms of which the Applicant shall make an offer to subscribe to the Offer shares and which will be considered as the application for Allotment of the Offer Shares in terms of the Draft Prospectus and/or the Prospectus.
"Application / Issue Closing Date" shall mean any such date on completion of the application hours after which the collection Bankers will not accept any Applications for the Issue.
"Application / Issue Opening Date" shall mean any such date on which the Collection Bankers shall start accepting Applications for the Issue, within the Application hours which shall be the date notified in a widely circulated English National Newspaper and a Hindi National Newspaper and a regional Newspaper.
"Application Period" shall mean the period between the Application Opening Date and the Application Closing Date (Inclusive of both dates) and during which prospective Applicants can submit their Applications.
"NSE" shall mean the NSE Limited, a stock exchange recognized by SEBI in terms of Securities Contracts (Regulation) Act, 1956.
"Closing / Allotment Date" shall mean the date of allotment of the Offer Shares by the Company, in accordance with the prospectus, which date will not be later than 90 days after application opening date, unless otherwise mutually agreed in writing between the LM and the Issuer Company.
"Companies Act" shall mean the Indian Companies Act, 1956 and/or the Companies Act, 2013, as amended from time to time
"Controlling", "Controlled by" or "Control" shall have the same meaning prescribed to the term "control" under the SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 2011, or as amended.
"Controlling Person(s)"with respect to specified person, shall mean any other person who controls such specified person.
"Draft Prospectus" shall mean the Draft Prospectus of the Company which will be filed with SME Platform of NSE in accordance with Section 32 of the Companies Act, 2013 for getting in- principle listing approval.
"Escrow Account" shall mean the Escrow Account as and when opened by the Issuer Company with a designated Escrow Collection Bank in order to collect the subscription monies procured from this offer of shares.
"Indemnified Party" shall have the meaning given to such term in this Agreement.
"Indemnifying Part" Shall have the meaning given to such term in this Agreement.
"Issue Shares" means the Issuer Company proposes to issue 18,75,000 Equity shares face value of Rs. 10/- each in accordance with the Chapter IX SEBI (ICDR) Regulations, 2018.
"Issue/ Offering" shall mean issue ------ Equity Shares having face value of Rs. ------/- each (the "Issue Shares" or "Offer Share") in accordance with the Chapter IX SEBI (ICDR) Regulations, 2018, (as defined herein) and applicable Indian securities laws at an Issue Price ("Issue Price") of Rs. -----/- per share aggregating to Rs. ----- Lakhs.
"LM" shall have the meaning given to such term in the preamble to this Agreement and "LM" shall mean the lead manager to the issue, or ABC Private Limited.
"Market Maker Reservation Portion" shall mean the reserved potion for the Designated Market Makers of ----- Equity shares of face value Rs. ---/- each at issue price of Rs. ------/- per share aggregating to Rs. ----- Lakhs.
"Material Adverse Effect" shall mean, individually or in the aggregate, a material adverse effect on the condition, financial or otherwise, or in the earnings, business, management Operations or prospects of the Company and its subsidiaries, taken as a whole.
"Memorandums of Understanding" shall mean the memorandum of understanding dated -------- entered between the Issuer Company and Lead Manager.
"Net Issue" the fresh issues of Equity shares to be offered in this Public Issue comprise of a Net Issue to the Public of ------ equity shares of Rs. ---/- each at Issue Price of Rs. ----/- each, aggregating to Rs. ---- Lakhs.
"Non-Institutional Applicants" shall mean all applicants other than QIBs or Retail Applicants and who have applied for Equity shares for an amount more than Rs. 2,00,000/-.
"Offer Document" shall mean and include the Draft Prospectus and the Prospectus as and when approved by the Board of Directors of Issuer Company and filed with NSE.
"Party" or "Parties" shall have the meaning given to such terms in the preamble to this Agreement.
"Prospectus" shall mean the Prospectus of the Company which will be filed with NSE/ SEBI/ROC and others in accordance with Section 32 of the Companies Act after getting in-principle listing approval but before opening the issue.
"Qualified Institutional Buyers" or "QIBs" shall have the meaning given to such term under the SEBI (ICDR) Regulations, 2018.
"Registrar" shall mean -------------------, a company within the meaning of the Companies Act, 1956 and having its registered office at-----------------------.
"Retail Applicants" shall mean individual applicants (includes HUFs and NRls) who have applied for equity shares for an amount not more than Rs. 2,00,000/- in any of the application options in the Offer.
"SEBI" shall mean the Securities and Exchange Board of India.
"SEBI (ICDR) Regulations 2018"shall mean the SEBI (Issue of Capital and Disclosure Requirements) Regulations 2018, as amended and as applicable to the Offering.
"SME Platform of NSE" shall mean the emerge platform of NSE for listing of Equity Shares offered und Chapter IX of the SEBI (ICDR) Regulations, 2018 as amended from time to time.
"Stock Exchange" shall mean SME platform of National Stock Exchange i.e. NSE.
"Underwriters" shall mean ABC Private Limited, individually and severally.
In this Agreement, unless the context otherwise requires:
On the basis of the representations and warranties contained in this Agreement and subject to its terms and conditions, the Market Maker hereby agrees to ensure Market Making in the shares of 95,000 in the manner and on the terms and conditions contained elsewhere in this Agreement and as mentioned below:
2.1 Following will be the underwriting obligations of each respective underwriters:
Details of underwriter |
No. of shares Underwritten |
Amount underwritten (Rs In Lakh) |
% of Total Issue Size Underwritten |
2.2 The Issuer Company shall before delivering to the Registrar of Companies (hereinafter referred to as "ROC") make available to the underwriters a copy of the Prospectus, which shall be as modified in the light of the observations made by NSE while issuing the in-principle approval letter the underwriters shall before executing their obligations under this agreement satisfy themselves with the terms of the issue and other information and disclosures contained therein.
2.3 The Company agrees that, if after filing of Prospectus with the ROC any additional disclosures are required to be made in the interest of the investors in regards to any matter relevant to the issue, the company shall with such requirements as may be stipulated by NSE or SEBI or the Lead Manager and compliance of such requirements shall be binding on the underwriter; provided that such disclosures shall not give a right to the underwriter to terminate or cancel its underwriting obligations unless such subsequent disclosures are certified by NSE or SEBI as being material in nature and essential for the contract of underwriting: the question whether or not such subsequent disclosures are material in nature, the decision of NSE or SEBI shall be final and binding on both the parties.
2.4 The subscription list for the public issue shall open not later than three months from the date of this agreement or such extended period(s) as the underwriters may agrees to in writing. The subscription list shall be kept open by the company for a minimum period of 3 working days and if required by the underwriter, the same may be kept open upto a maximum of 10 calendar days failing which the underwriter shall not be bound to discharge the underwriting obligations under this agreement.
2.5 The application bearing the stamp of the underwriter or as the case may be the sub-underwriter whether made on their own behalf or otherwise shall be treated in the same manner as the applications received directly from the members of the public and, in the event of the issue being oversubscribed, such applications shall be treated on par with those received from the public and under no circumstances, the applications bearing the stamp of the underwriter or the sub underwriter shall be given any preference or priority in the matter of allotment of the offer shares.
2.6 There is no provision for inter-changeability of the underwriting obligation i.e. ABC shall have to underwrite their respective obligations as stated in 2.1 of this agreement and that they shall not be allowed to interchange any portion of the said obligations. All the applications made by any applicant except by ABC in its "OWN" account shall be construed to be part of the "Net Issue" applications. In case of shortage in any of the specific portion (i.e. Market Maker Reservation Portion and the Net Issue Portion), the other Underwriter shall not be liable for any damages or losses as long as it has completed its individual obligations stated in 2.1 of this agreement.
2.7 Hence, with respect to the Market Maker Reservation Portion, it is compulsory that the Market Maker i.e. ABC subscribe to the specific portion of the Issue set aside as "Market Maker Reservation Portion" as it needs to be subscribed in its own account in order to claim compliance with the requirements of Regulation 261 of the SEBI (ICDR) Regulations, 2018 as amended from time to time. Hence, it is prudent that ABC ensure that its portion of -------- equity shares is subscribed prior to the Closure of the Issue and that there are no relevant shortages in the same. However, if in any situation there is a shortage in the same upon the closure of the issue, then the shortage shall have to be met by ABC by arranging for additional application in its "OWN" account and ABC shall not be allowed to procure applications from the Public at large in order to meet such shortage.
2.8 Only the Underwriter for the "Net Issue" shall be entitled to arrange for sub-underwriting of its underwriting obligation on his own account with any person or persons on term to be agreed upon between them. Notwithstanding such arrangement, the Underwriters shall be primarily responsible for sub-underwriting and any failure or default on the part of the sub-underwriters to discharge their respective sub-underwriting obligations shall not exempt or discharge the underwriter of his underwriting obligation under this agreement.
2.9 If the Net Issue is undersubscribed, ABC being the Underwriters for such portion shall be responsible to subscribe/ procure subscription to the unsubscribed shares. However, provided that such obligation shall not exceed the amount mentioned in clause 2.1 above.
2.10 The said underwriting obligations for each underwriter in case of shortage in its respective portions shall be discharged in the manner mentioned below:
2.11 The Company is free to quantify the damage being a multiple of the value of the shares not subscribed by the respective underwriter.
3.1. Net worth of the Underwriter: The underwriter(s), hereby declares that they satisfy the Net Worth/ Capital Adequacy Requirements specified under the SEBI (Underwriter) Rules and Regulations, 1993 or the bye-laws of the stock exchange of which the underwriter is a member and that he is competent to undertake the underwriting obligations mentioned in clause 2 hereinabove
3.2. Registration with the SEBI: The underwriter(s) hereby declares that the underwriters being Merchant Banker or stock Brokers are entitled to carry on the business as an underwriter without obtaining a separate certificate under the SEBI (Underwriters) Regulations 1993 framed under the SEBI Act.
3.3. The Underwriters confirm to the Company that they are responsible and liable to the Company, for any contravention of the SEBI Act, rules or regulations thereof. The Underwriters further confirm that they shall abide with their duties, function, responsibilities and obligations under the SEBI (Merchant Bankers) Regulations, 1992 and the SEBI (Underwriters) Regulations 1993.
3.4. In addition to any representation of the Market Maker under the Underwriting Agreement or the Registration Documents filed with the SME Platform of NSE, the Market Maker hereby represents and warrants that:
3.5. The Underwriter(s) acknowledges that it is under a duty to notify the Lead Manager and the SME Platform of NSE immediately in case it becomes aware of any breach of a representation or warranty.
4.1 Warranty as to statutory and other approvals: The Company warrants that all consent, sanctions, clearance, approvals, permissions, licenses, etc., in connection with the public issue as detailed in the prospectus or required for completing the prospectus have been obtained or will be obtained and the same shall remain effective and in force until the allotment of all the shares are completed.
4.2 In addition to any representations of the Lead Manager under the Due Diligence Certificate and underwriting agreement the Lead Manager hereby represents and warrants that:
4.3 The Issuer Company acknowledges that it is under a duty to notify the Market maker and the SME Platform of NSE immediately in case it becomes aware of any breach of a representation or warranty.
5.1. The several obligations of the Underwriter(s) under this Agreement are subject to the following conditions:
5.2. If any conditions specified in 5.1 shall not have been fulfilled when and as required to be fulfilled, this Agreement may be terminated by the Market Maker by written notice to the Lead Manager any time on or prior to the Listing Date; provided, however, that this Section 6.2, Sections 3,4,5,6.3,7,9,10,11,12,13,14,15,16,17,18,19 and 20 shall survive the termination of this Agreement.
6.1 In consideration of the underwriting obligations performed by the underwriters the Issuer Company shall pay the Underwriters fees and commissions as mutually agreed by the parties in respect of the obligations undertaken by them, as per the individual engagement/mandate letters. Such aggregate fee shall be paid to the Underwriters or such other persons as directed by the Underwriters from time to time. However, it may be noted that the rate so agreed upon shall be subject to the provisions of section 40 of the Companies Act, 2013 and that the obligation to pay underwriting commission shall arise only upon the underwriter fulfilling his underwriting obligation and duly subscribing to the shares, if any, devolved on him.
6.2 The Issuer Company shall not bear any other expense or losses, if any, incurred by the Underwriters in order to fulfill their respective Obligations, except for the fees/commissions etc. as mutually agreed
7.1 The Underwriter herein (ABC Private Limited ) shall indemnify and keep indemnified the Issuer Company ("Indemnified Party") for its own account and on account of their respective Affiliates and all the respective directors, officers, employees, duly authorized agents and Controlling Persons (each, an "Indemnifying Party") from and against any and all losses, liabilities, costs, claims, charges, actions, proceedings, damages, expenses or demands which they (or any of them) incur or which is made against them (or any of them) as a result of or arising out of, or in relation to the IPO subscription, trading, liquidity and failure to make minimum market requirement from time to time which are determined by a court or arbitral tribunal of the competent jurisdiction to have resulted from any bad faith, dishonesty, illegal or fraudulent acts or the willful defaults or gross negligence on the part of the lead Manager or Market maker, respectively. Such indemnity will extend to include all reasonable costs, charges and expenses that such indemnified party may pay or incur in disputing or defending any such loss, liability, cost, claim, charge, demand or action or other proceedings.
7.2 The Issuer Company shall indemnify and keep indemnified, Lead Manager, Underwriters and Market Makers for its own account and their respective Affiliates and all other respective directors, officers, employees, professionals, duly authorized agents and controlling persons (each, an "Indemnified Party") from against any and all losses, Liabilities. costs, claims, charges, actions, proceedings, damage, expenses or demands which they (or any of the them) incur or which is made against them (or any of them) as a result of or arising out of. or in relation to, any misrepresentation or alleged misrepresentation of a material fact contained in the draft prospectus and prospectus or omission or alleged omission there from of a material fact necessary in Oder to make the statements therein in the light of the circumstances under which they were made not misleading, or which are determined by the court or arbitral tribunal of competent jurisdiction to have resulted from bad faith, dishonesty, illegal or fraudulent acts or the willful default or gross negligence on the part of the company. Such indemnity will extend to include all reasonable costs, charges and other expenses that such Indemnified party may pay or incur in disputing or defending any such loss liability, cost, claim, charge, demand or action or other proceedings. Provided however that the issuer company will not be liable to the lead manager, underwriters, Market Makers to the extent that any loss, claim, damage or liability is found in a judgment by the court to have resulted solely and directly from any of the Underwriters severally as the case may be, bad faith or gross negligence or willful misconduct, illegal or Fraudulent acts, in performing the services under this agreement.
8.1 Notwithstanding anything contained herein, the underwriter(s) shall have the option to be exercised by him at any time prior to the opening of the issue as notified in the prospectus of terminating this agreement under any or all of the following circumstances:
8.2 Notwithstanding Section 8.1, in the event of the Company failed to perform all or any of the covenants within limit specified wherever applicable under this letter of underwriting, the underwriter shall inform the Company with documentary evidence of the breach/non performance by Registered post/ Speed post and acknowledge obtained therefore, whereupon the underwriter shall be released from all or any of the Obligations required to be performed by him.
8.3 The provisions of Sections 3,4,5,7,9,10,11,12,13,14,15,16,17,18,19and 20 shall survive the termination of this Agreement.
Any notices or other communication given pursuant to this Agreement must be in writing and (a) delivered personally, or (b) sent by tele facsimile or other similar facsimile transmission, (c) sent by registered mail, postage prepaid, to the address of the respective Party specified below, or to fax number given below or any other number as may be designated in writing by such Party from time to time. All notices and other communications required or permitted under this Agreement that are addressed as provided in this Section 10 will (i) if delivered personally or by overnight courier, be deemed given upon delivery; (ii) if delivered by tele facsimile or other similar facsimile transmission, be deemed to be given electronically confirmed; and (iii) if sent by registered mail, be deemed given when received.
All obligations of the Issuer Company, the Underwriters, are subject to the conditions that time wherever stipulated, shall be of the essence of the Agreement. Consequently any failure on the part of the Company or the Underwriter to adhere to the time limits shall unless otherwise agreed between the Company and the Underwriter, discharge the Underwriter or Company of his / their obligations under the Underwriting Agreement. This Agreement shall be in force from the date of execution and will expire on completion of allotment for this Issue.
The Issuer Company and the Underwriters(s) acknowledges and agrees that they are all liable on several basis to each other in respect of this representation, warranties, indemnities, undertakings and other obligations given, entered into or made by each of them in this Agreement.
The Agreement shall be binding on and inure to the benefit of the Parties hereto and their respective successors. The Underwriter(s) shall not assign or transfer any of its respective rights or obligation under this Agreement or purport to do so without the consent of the Issuer Company. The Issuer Company shall not assign or transfer any of their respective rights or obligations under this Agreement or purport to do so without the consent of the Underwriter(s).
This Agreement shall be governed by and construed in accordance with the laws of the Republic India and shall be subject to --------------- Jurisdiction.
Reference to arbitration - Any dispute arising out of this agreement between the underwriter and the Issuer Company shall be referred to the Arbitration Committee by the NSE in which the share are to be listed and the decision of the Arbitration Committee shall be final and binding on both the parties.
All proceedings in any such arbitration shall be conducted under the Arbitration and Conciliation Act, 1996, as amended, and shall be conducted in English. The arbitration shall take place in -------------------------------, India
Any reference of any dispute, difference or claim to arbitration under this Agreement shall not affect the performance by the Parties of their respective obligations under this Agreement other than the obligations relating to the dispute, difference or claim referred to arbitration.
No amendment, supplement, modification or clarification to this Agreement shall be valid or binding unless set forth in writing and duly executed by all the Parties to this Agreement.
If any provisions of this agreement is determined to be invalid or unenforceable in whole or in part, such invalidity or unenforceability shall attach only to such provisions or the applicable part of such provision and the remaining part of such provision and all other provisions of this Agreement shall continue to remain in full force and effect.
This Agreement may be executed in separate counterparts; each of which when so executed and delivered shall be deemed to be an original, but all the counterparts shall constitute one and the same Agreement.
The rights and remedies of each of the parties and each indemnified person under Section 7 pursuant to this Agreement are cumulative and are in addition to any other rights and remedies provided by general law or otherwise.
If any provision in this Agreement shall be held to be illegal, invalid or unenforceable, in whole or in part, under any enactment or rule of law, such provision or part shall to that extent be deemed not to form part of this Agreement but the legality, validity and enforceability of the remainder of this Agreement shall not be affected.
No party may assign any rights under this Agreement without the consent of the party against whom the right operates. No provision of this Agreement may be varied without the consent of the Lead Manager.
The undersigned hereby certifies and consents to act as Lead Manager, Underwriter or Market Maker (as the case may be) to the aforesaid Issue and to their name being inserted as Lead Manager or Market Maker (as the case may be) in the Draft Prospectus, Prospectus which the Issuer Company intends to issue in respect of the proposed Issuing and hereby authorize the Issuer Company to deliver this Agreement to SME Platform of NSE, ROC and SEBI.
IN WITNESS WHEREOF, the Parties have entered this agreement on the date mentioned above.
For, ABC Private Limited
Designation:
DIN:
For, XYZ Pvt Ltd.
Designation:
DIN:
Witness:
Sr. No |
Name |
Complete Address |
Signature |
1. | |||
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SME Company Owners
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