Concept of underwriting contract
An underwriting contract is an agreement that establishes the conditions for all securities offered in a given public offer to have a buyer before the public offering is in progress and is provided for in the Portuguese jurisdiction in Article 339 of the Portuguese Securities Code.
Under the underwriting contract, the financial intermediary acquires the securities that are the object of a public offer of distribution and undertakes to place them at its own risk under the terms and in the terms agreed with the issuer or the seller. As in the case of placement with collateral, the underwriting also implies a dual performance of the financial intermediary who acquires the securities object of the offer and undertakes to offer them to the investors. However, contrary to what happens in the guarantee of placement, at the underwriting, the acquisition by the financial intermediary appears before the stage of externalization of the offer, occurring prior to placing these amounts in the public and no longer at the end of the offer period.
The performance of the financial intermediary under an underwriting contract is generally characterized by the doctrine as a double obligation, through which the intermediary undertakes, first of all, to acquire for himself the securities that are the object of the issue or sale and secondly to place those values which it subscribes to the public.
The acquisition of the securities, prior to their offer to the public, does not constitute an obligation of the financial intermediary but rather a presupposition or an element of the underwriting contract.
