A Western Underwriting Agreement is a type of contract used in firm commitment underwriting, where members of a syndicate agree to take on liability separately rather than jointly. This means that if one member cannot sell their entire allotment of securities, they alone are responsible for purchasing any unsold securities. These agreements are commonly utilized in corporate underwriting transactions.
Western Underwriting Agreements are primarily used in the context of securities law and corporate finance. They are relevant in situations where companies seek to raise capital through the sale of securities, such as stocks or bonds. These agreements help define the responsibilities and liabilities of each syndicate member, ensuring clarity in the underwriting process.
Users can often manage related forms and agreements themselves using templates available through services like US Legal Forms, which provide professionally drafted legal documents tailored to specific needs.
Here are a couple of examples of abatement:
(Hypothetical example) A corporation decides to issue one million shares of stock to raise funds for expansion. They engage a group of underwriters who enter into a Western Underwriting Agreement. If one underwriter is unable to sell its allotted 200,000 shares, it must purchase those shares itself, while the remaining underwriters are not affected.
If you are involved in a securities offering and need to understand your responsibilities under a Western Underwriting Agreement, consider reviewing the agreement carefully. It may be beneficial to consult with a legal professional to ensure compliance and understanding of your obligations. Additionally, you can explore US Legal Forms for templates that can assist you in drafting or reviewing such agreements.
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| Attribute | Details |
|---|---|
| Type of Agreement | Western Underwriting Agreement |
| Liability | Severable among syndicate members |
| Common Use | Corporate underwriting |
| Responsibility for Unsold Securities | Only the member who cannot sell |
Its main purpose is to outline the responsibilities and liabilities of syndicate members in a securities offering.