BIM67000 - Underwriting of shares: contents

This section deals with the taxation of those underwriting an issue of shares.

In this section `shares' should be read as including stocks and securities and `underwriting' as including sub-underwriting.

Background

When a company decides to issue shares to the public, it may decide to enter a contract with an underwriter, Under such an arrangement the underwriter will agree to take those shares which are not otherwise subscribed.

In exchange for this service the underwriter is paid a commission, which is usually a fixed percentage of the total offer price of the shares.