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Simple English definitions for legal terms

standby underwriting

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A quick definition of standby underwriting:

Standby underwriting is when someone agrees to buy any unsold shares of a new investment that is being offered to the public. This is done for a fee and is a way to ensure that the investment will be fully sold. It is one of three types of underwriting, which is when someone takes on the risk of insuring or buying a new investment.

A more thorough explanation:

Definition: Standby underwriting is a type of underwriting where the underwriter agrees to buy any unsold shares from the issuer after a public offering, for a fee.

Underwriting is the act of assuming a risk by insuring it or agreeing to buy all or part of a new issue of securities to be offered for public sale. There are three types of underwriting:

  • Best-efforts underwriting: Underwriting in which an investment banker agrees to direct, but not guarantee, the public sale of the issuer's securities.
  • Firm-commitment underwriting: Underwriting in which the underwriter agrees to buy all the shares to be issued and remain financially responsible for any securities not purchased.
  • Standby underwriting: Underwriting in which the underwriter agrees, for a fee, to buy from the issuer any unsold shares remaining after the public offering.

For example, if a company wants to issue 100,000 shares of stock to the public, they may hire an underwriter to help with the sale. If the underwriter is doing a standby underwriting, they will agree to buy any shares that are not sold to the public. So, if only 80,000 shares are sold, the underwriter will buy the remaining 20,000 shares from the company.

This type of underwriting provides a safety net for the issuer, as they are guaranteed to sell all of their shares, even if the public is not interested in buying them. However, it also comes at a cost, as the underwriter charges a fee for this service.

standby letter of credit | standby underwriting agreement

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TGM
18:41
not sure if I should email them to say that, or just hold off on sending it and not give an excuse
18:41
I think I just wouldn’t reach out and if they ask for them then say that
Dkk
18:41
@tgm Yeah sounds good, say that if they ask
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Dkk
18:50
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Dkk
18:57
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19:05
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Dkk
19:18
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Dkk
19:19
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windyMagician
19:20
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windyMagician
19:20
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Dkk
19:21
Bill Clinton, first and last black president
windyMagician
19:23
I want to go running but my leg feels weird
windyMagician
19:23
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Dkk
19:26
It needs more alcohol. You tingle when your nerves need watering.
19:27
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windyMagician
19:27
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windyMagician
19:27
I'm sober lol
Dkk
19:38
Anyone else get the google notification that your LSD password has been compromised lol. LSD got hacked.
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CynicalOops
21:03
You think you just fell out of a coconut tree?
jackfrost11770
21:10
nope dk
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