Underwriting Agreement Template for United States

A Underwriting Agreement forms the cornerstone of securities offerings in Saudi Arabia, establishing the terms between companies issuing securities and their underwriters. These contracts spell out how investment banks will purchase and resell shares to the public, particularly during initial public offerings (IPOs) on the Saudi Stock Exchange (Tadawul).

Under Saudi Capital Market Authority regulations, the agreement must detail the offering price, underwriter commissions, and key responsibilities like marketing the securities and managing risk. It protects both parties by clearly defining the underwriter's commitment to buy unsold shares and the issuer's obligations to provide accurate financial disclosures - making it essential for successful public offerings in the Kingdom.

Companies need a Underwriting Agreement when raising capital through public offerings on the Saudi Stock Exchange (Tadawul). This agreement becomes essential once your company decides to issue securities and needs investment banks to guarantee the sale of shares. The Capital Market Authority requires this agreement before allowing any public offering to proceed.

The timing is critical - put this agreement in place after your board approves the offering but before filing registration documents with regulators. Early preparation helps secure favorable terms with underwriters and ensures compliance with Sharia guidelines. For successful IPOs in Saudi Arabia, having this agreement ready at least 3-4 months before the planned offering date is ideal.

• Firm Commitment Underwriting: Most common in Saudi IPOs - underwriters guarantee to buy and resell all securities, offering maximum certainty to issuers
• Best Efforts Underwriting: Underwriters commit to sell securities but don't guarantee full placement, typically used for smaller or riskier offerings
• Standby Underwriting: Underwriters agree to purchase any unsold shares after the initial offering period, common in rights issues
• Shariah-Compliant Underwriting: Specially structured agreements ensuring compliance with Islamic finance principles, mandatory for sukuk offerings
• Syndicated Underwriting: Multiple underwriters share the risk, typically used for large offerings on Tadawul

• Issuing Companies: Saudi corporations seeking to raise capital through public offerings on Tadawul must initiate and approve these agreements
• Investment Banks: Act as lead underwriters, guaranteeing the securities sale and managing the distribution process
• Legal Counsel: Draft and review agreements to ensure compliance with CMA regulations and Sharia principles
• Capital Market Authority: Reviews and approves the agreement as part of the offering registration process
• Company Directors: Must sign and personally certify the accuracy of disclosures in the agreement
• Shariah Advisors: Verify the agreement's compliance with Islamic finance principles

• Company Information: Gather detailed financial statements, corporate approvals, and registration documents for the offering
• Offering Details: Define the number of shares, price range, and distribution timeline aligned with CMA requirements
• Underwriter Terms: Specify commission rates, risk allocation, and marketing responsibilities
• Shariah Compliance: Obtain preliminary approval from qualified Shariah advisors on the structure
• Due Diligence: Complete comprehensive financial and legal reviews before drafting begins
• Documentation: Our platform generates compliant agreements incorporating all these elements, ensuring alignment with Saudi regulations
• Internal Review: Have key stakeholders validate all terms before finalizing

• Parties Section: Full legal names and addresses of the issuer and all underwriting banks
• Securities Details: Precise description of shares or securities being offered, including class and quantity
• Pricing Terms: Clear statement of offering price, underwriter commissions, and payment mechanisms
• Underwriter Obligations: Specific commitments for purchase and distribution of securities
• Issuer Warranties: Representations about company status and financial accuracy
• Shariah Compliance: Explicit confirmation of alignment with Islamic finance principles
• CMA Compliance: References to relevant Capital Market Authority regulations
• Termination Rights: Conditions under which either party may exit the agreement

A Underwriting Agreement differs significantly from a Bond Purchase Agreement in several key aspects, though both deal with securities transactions in Saudi Arabia. Understanding these differences is crucial for proper documentation of capital market activities.

• Primary Purpose: Underwriting Agreements focus on new share offerings and IPOs, while Bond Purchase Agreements specifically handle debt instrument transactions
• Risk Structure: Underwriting Agreements involve the underwriter taking on market risk for equity distribution, whereas Bond Purchase Agreements typically involve direct purchases with predetermined yields
• Regulatory Framework: Underwriting Agreements must comply with CMA's equity offering rules and Tadawul listing requirements; Bond Purchase Agreements follow debt market regulations
• Duration: Underwriting Agreements typically cover a specific offering period, while Bond Purchase Agreements often involve longer-term commitments with fixed maturity dates
• Shariah Considerations: Underwriting Agreements focus on equity compliance, while Bond Purchase Agreements require specific sukuk-related structuring