Corporation Procedure; Law, Finance, Accounting (Paperback)

This historic book may have numerous typos and missing text. Purchasers can download a free scanned copy of the original book (without typos) from the publisher. Not indexed. Not illustrated. 1922 Excerpt: ...some real reason for a change. Then he should cut off all relations as quickly as possible and entrust his financial affairs to some other banking house. In other words, the banker is rendering a personal and partly professional service rather than merely buying and reselling a certain commodity. 277. Syndicate Agreements There are four distinct types of agreements between the underwriting syndicate and the corporation which puts out the underwritten issue. Possibly other variations from these basic types might be found. 1. The corporation may itself sell the issue and the syndicate simply insure that the whole issue will be disposed of within a given time at a minimum price. The corporation, we will say, is bringing out an issue of $1,000,000 6% bonds, which it offers at par. The underwriting syndicate agrees that it will take any bonds left unsold at the end of the year at a special price of 90. The syndicate would, perhaps, receive a commission of 2% to 5% for making this agreement. If the issue were successfully sold, the syndicate would merely collect and distribute its commission and dissolve. If the issue at the agreed price were unsuccessful, the syndicate would take over the unsold balance and dispose of it as best it might. This type of agreement is now uncommon except when a corporation has given a subscription privilege to its own shareholders and is apprehensive that the offering will not be taken up in full. 2. A banking house may conclude an arrangement with a corporation to handle the sale of a block of its securities and may afterward call in other banking houses to take over certain proportions of the risk and of the profits. The corporation, however, has no dealings with the syndicate as such, but only with the original underwriter...