Traits Of An Underwriters Counsel And Its Responsibilities

By Annabelle Holman


Companies, businesses, and even the government usually issue bonds to those who are interested in purchasing them. The bonds usually will indicate that the purchaser will be given a certain monetary remuneration after a certain period of time has elapsed. The money collected from the purchase will then be used by these bodies to finance a certain project or undertaking.

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.

Various tasks and duties are assigned to these group of representatives. The issuing body and the underwriting firm may have reached an agreement regarding the undertaking. Most commonly, the counsel should be preparing the disclosure statements of the issuer. They should also be reviewing them as the statements stipulate the interest rates and other financial disclosures.

The undertaking should be legal and the counsel needs to confirm that it is. This is for the prevention of any legal hurdles that could hinder the realization of the transaction. The group also is responsible in scrutinizing the legality of the bonds being offered. The bonds should comply with the requirements and policies established by the government that is in charge of trade agreements.

Another thing that they have to do is to draft the bond offer contract which typically includes the official statement. This contract is a form of a guarantee that should benefit both the purchaser and the client. This legal paper normally consists of the purpose why the bonds are issued, the manner of repaying them, and the financial and economic position of the issuer and its capability to pay in the future.

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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