OFS-3.6 OFS-3.6 Role and Responsibilities of the Underwriter
Eligibility
OFS-3.6.1
Any person acting as an
underwriter to any offering, must be licensed or otherwise authorised by the CBB to undertake such activity.January 2014OFS-3.6.2
For the purpose of this Module, the definition, role and requirements related to the
underwriter also apply to co-underwriters .January 2014OFS-3.6.3
The CBB may investigate the financial suitability of a proposed
underwriter and may reject the appointment of theunderwriter and/or the application for offering if it is not satisfied as to theunderwriter's ability to meet its commitment under the proposed underwriting agreement and its potential impact in its capital adequacy.January 2014Firm Commitment Underwriting
OFS-3.6.4
Where an
underwriter has been appointed and thesecurities are not fully subscribed during theoffering period , theunderwriter must purchase the balance of thesecurities through afirm commitment underwriting arrangement.January 2014OFS-3.6.5
The
firm commitment underwriting arrangement must be detailed in an underwriting agreement, which must be submitted to the CBB as part of the offering ofsecurities application.January 2014OFS-3.6.6
For the purpose of this Module, the total of all the underwriting undertakings of the
underwriter , the company that controls it, its subsidiary, a subsidiary of the company that controls it and a company affiliated with it, are calculated as one underwriting undertaking.January 2014OFS-3.6.7
The
underwriter may appoint or form an underwriting group for any underwritten issue.January 2014OFS-3.6.8
The
underwriter must comply with the CBB Law, rules and regulations, including Volume 6 of the CBB Rulebook, and theissuer's Memorandum and Articles of Association, particularly in respect of the eligibility of the expected subscribers to acquire theissuer's securities and related disclosure requirements.Amended: October 2017
January 2014OFS-3.6.9
After the approval of the
offering documents (including the underwriting agreement) neither theissuer nor any advisor or person acting on its behalf, nor theunderwriter or any person acting on its behalf, has the right to change any provision or commitments stipulated in the underwriting agreement.January 2014OFS-3.6.10
All commitments, terms and conditions stipulated in the underwriting agreement must be enforced and implemented without any change or alterations, including the relevant timeframes.
January 2014OFS-3.6.11
The CBB may consider amendments to an underwriting agreement where the stability of the financial sector and/or capital market will be adversely affected by the agreement's current provisions. In this regard, the CBB must be provided with a supporting application signed by both the
issuer and theunderwriter , before considering such amendment.January 2014Firm Commitment Underwriting
OFS-3.6.12
A
firm commitment underwriting arrangement is required for all public offerings. However, the CBB may accept other underwriting arrangements other thanfirm commitment underwriting , in the following cases:(a) Offering ofsecurities below the average market price during the last six months; or(b) Offering ofsecurities at the flat par value.January 2014OFS-3.6.13
A
firm commitment underwriting arrangement may also be done through a bought-out deal wherein the underwritten issue is bought entirely by theunderwriter to resell to investors.January 2014OFS-3.6.14
In case of issues which are exempted from
firm commitment underwriting arrangements (non-public offers), the CBB may acceptpartial underwriting commitment arrangements, orbest-efforts underwriting .January 2014Disclosure
OFS-3.6.15
The name of the
underwriter and the terms of the underwriting agreement must be prominently disclosed in theoffering document and in the application for approval.January 2014OFS-3.6.16
A summary of the underwriting agreement or arrangements must be provided in the
prospectus oroffering document , including but not limited to the cost of underwriting and other related fees and charges.January 2014OFS-3.6.17
The
underwriter is required to provide sufficient and adequate information to the CBB and disclose the same in theprospectus oroffering documents as to the method, bases, mechanism, assumptions, and all other related information used to reach theoffering price .January 2014OFS-3.6.18
In cases where the
offering price is determined by theunderwriter jointly with any other advisor or third party, the name and role of such advisor or person must be provided to the CBB and disclosed in theprospectus oroffering document .January 2014OFS-3.6.19
The underwriting agreement must be provided as a document available for inspection to the subscriber.
January 2014OFS-3.6.20
For purposes of Paragraph OFS-3.6.17 and item 25.1(b) under Section 17 of Appendix OFS-1, relating to the pricing of securities and bases or methods for determining the issue or offer price and for prospectus disclosure purposes, the bases used for determining the pricing of securities must be elaborated on and general statements must be avoided.
Added: October 2017OFS-3.6.21
For purposes of Paragraph OFS-3.6.20, factors that are commonly cited in pricing determination which should be elaborated may include, but are not limited to, prevailing market performance and condition (e.g. price earnings ratio, dividend yield, etc.), financial and operating performance (e.g. earnings per share, etc.), consolidated net tangible assets per share and/or net assets per share (or liabilities as to the case may be), earnings potential, assessment of management, market valuation of companies in related businesses, intellectual property and technology, etc. Where appropriate, cross-references should be made to the relevant and specific sections of the prospectus.
Added: October 2017
