Private Law Research

LEGAL NATURE OF THE UNDERWRITING COMMITMENT CONTRACT IN THE CAPITAL MARKET

Document Type : Research Paper

Authors

Ali Ansari 1
seyed mortaza shahidi 2
hassan azarniyush 3

1 ansari@khu.ac.ir

2 Assistant Professor Department of Private Law. Judicial Sciences and Administrative Services University, Tehran, IRAN

3 Graduate Student of Private Law, Faculty of Law and Political Science, Kharazmi University of Tehranکارشناس ارشد حقوق خصوصی دانشگاه خوارزمی

https://doi.org/10.22054/jplr.2018.23457.1609
Abstract
In accordance with the definition of Article 1 of the Securities Market Act, a commitment is a third party's commitment to purchase securities that have not been sold within the deadline. The publisher intends to transfer the various risks involved in the filing process to a trusted one. In this way, the underwriting contract is the role of insurance finance in the supply of securities. Given the existing methods in the capital markets of different countries to conclude an accrual contract, this contract can have a different legal nature. In selected capital markets, the obligee accepts the acquisition of securities, while in the capital market of Iran, the ownership of the securities is not transferred to the obligated issuer. By concluding the contract, the publisher will be obliged to enter into a secondary contract. Subject to the obligation contained in this contract, the intention of the parties in the form of a contract cannot be accepted. Unlike the current method in the capital market in the selected countries, this type of commitment creates a personal relationship and covenant between the parties and there is no transfer of ownership involved.
 
 
 
 
 

Highlights

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Keywords

Risk Transfer
Stock Trading
Insurance
Underwriting Commitment
Subscription

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English Sources
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-       Erik banks, Liquidity Risk (Managing Funding and Asset Risk), (Basingstoke-uk: Palgrave Macmillan,2014).
 
-      Fleuriet, Michel, Investment Banking Explained(An Insider's Guide to the Industry), (New York –USA: McGraw Hill Professional,2008).
 
-      Greene Edward F, «Determining the Responsibilities of Underwriters Distributing Securities Within an Integrated Disclosure System»,Notre Dame Law, January, issue 5, volume 56,1981.
 
-      Iannotta, Giuliano, Investment banking (A Guide to Underwriting and Advisory Services), (Berlin –Germany: Springer-Verlag Heidelberg,2010).
 
-      Kaliski, Burton S,Encyclopedia of Business and Finance, (New York- usa: Macmillan Reference,2001).
 
-      Stowell, David, Investment banks (hedge funds, and private equity), (boston-Usa: Academic Press,2012.)
 
Private Law Research
Volume 7, Issue 26
Spring 2019
Pages 37-58

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