To,
The Executive Directors All Stock Exchanges
Precaution while granting underwriting permission.
Some instances have been brought to our notice that broker underwriters are signing underwriting agreements in anticipation of no objection/ approval from Stock Exchanges and also give an assurance to Lead Managers that no objection/ approval will be received. However, such underwriters do not pursue/ obtain permission from the Stock Exchange. It is desirable that Stock Exchanges should deny approval/ no objection certificate if member brokers have taken up underwriting commitment without prior approval of the Exchange/ in anticipation of approval/ no objection. Merchant bankers are being separately advised that underwriting contract shall not be accepted unless a written no objection/ approval of Stock Exchange is actually furnished at the time of signing the contract.
Thanking you,
Yours faithfully, sd/-
V.R. NARASIMHAN DIVISION CHIEF - SMD