BIM67000 - Underwriting of shares: contents
This section deals with the taxation of those underwriting an issue of shares.
In this section 鈥榮hares鈥� should be read as including stocks and securities and 鈥榰nderwriting鈥� 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.