Underwriting Agreement Template for England and Wales

A Underwriting Agreement sets out the terms when investment banks agree to buy and resell new securities from a company going public or issuing bonds. It's the key contract that makes IPOs and bond offerings work in practice, with the underwriters essentially promising to find buyers for the securities.

Under English law, these agreements protect both sides by clearly stating the price the underwriters will pay, how many securities they'll purchase, and their commission structure. They also include important safeguards like the "force majeure" clause, which lets underwriters back out if market conditions suddenly deteriorate before the offering completes.

Companies need a Underwriting Agreement when raising capital through an IPO or bond offering on the London markets. This agreement becomes essential once you've decided to go public or issue debt securities and have selected your investment bank partners.

The timing is critical - you'll need this agreement in place before any securities can be marketed to investors. Most companies work with their legal counsel to negotiate these terms 3-6 months before the planned offering date. Getting the agreement right early helps avoid delays and ensures both sides understand their obligations around pricing, marketing, and distribution of the securities.

• Firm Commitment Underwriting: The most common type where investment banks guarantee to buy all securities and accept full market risk
• Best Efforts Underwriting: Investment banks only agree to sell as many securities as possible without buying them outright
• Standby Underwriting: Underwriters step in to purchase any unsubscribed shares after the initial offering
• Mini-maxi Underwriting: Sets minimum subscription levels before the offering proceeds, protecting both issuer and underwriter
• Bought Deal: Underwriters purchase the entire offering immediately at a set price, popular for smaller UK bond issues

• Investment Banks: Act as lead underwriters, coordinating the offering and committing to buy and resell securities
• Issuing Companies: The organizations raising capital through IPOs or bond offerings who sell their securities to underwriters
• Corporate Lawyers: Draft and negotiate the Underwriting Agreement terms, ensuring regulatory compliance and proper risk allocation
• Financial Advisers: Help structure the deal and advise on pricing and market conditions
• Regulatory Bodies: Including the FCA, who oversee the process and ensure compliance with UK securities laws

• Securities Details: Gather specifics about the offering size, type of securities, and pricing expectations
• Due Diligence: Compile company financial statements, business plans, and risk factors for disclosure
• Underwriter Terms: Define commission structures, purchase commitments, and any syndicate arrangements
• Timeline Planning: Map key dates for marketing, pricing, closing, and settlement of the offering
• Legal Requirements: Check FCA listing rules and UK securities regulations that apply to your specific offering
• Risk Allocation: Determine indemnification terms and force majeure conditions between parties

• Purchase Commitment: Clear terms on the underwriters' obligation to buy securities and the agreed price
• Representations & Warranties: Company statements about business condition, financial status, and legal compliance
• Commission Structure: Detailed breakdown of underwriting fees, expenses, and payment terms
• Closing Conditions: Specific requirements that must be met before the deal completes
• Indemnification: Protection for underwriters against losses from company misrepresentations
• Force Majeure: Circumstances allowing underwriters to terminate their obligations
• Governing Law: Explicit statement that English law governs the agreement

A Underwriting Agreement differs significantly from a Bond Purchase Agreement, though both relate to securities transactions. The key distinction lies in their scope and the relationships they govern.

• Purpose and Structure: Underwriting Agreements cover the entire IPO or bond offering process, including marketing and distribution, while Bond Purchase Agreements focus solely on the final purchase transaction
• Parties Involved: Underwriting Agreements typically involve multiple investment banks in a syndicate, whereas Bond Purchase Agreements often deal with direct purchases between issuer and investor
• Risk Allocation: Underwriting Agreements include comprehensive market risk provisions and force majeure clauses, while Bond Purchase Agreements focus mainly on payment and delivery terms
• Timing: Underwriting Agreements are executed earlier in the process, often months before the offering, while Bond Purchase Agreements come into play at the point of sale