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Underwrite mark request

to keep yourself updated subscribe to integral learn and click the bell icon friends we understood the concept of mark application now let us understand how this mark application works in case of underwriting of shares one thing if there is a signal and a writer and if the entire issue is underwritten there is no you need of using marked applications or unmarked application it is relevant only if it is either a partial underwriting or there is a joint and writing let us take the example of our company a limited which as you should 10,000 shares how do these 10,000 shares X has under written 6000 shapes out of this 10,000 shares X has underwritten 6000 chips at the end of the issue the company got applications for eleven thousand shares so we issued ten thousand the public liked our company and the public has given applications for eleven thousand shares out of these eleven thousand five thousand we're mag application and the balance six thousand web and mag application what was X commitment X commitment was for six thousand shares how much did we get as marked application five thousand shares can we tell that X has a further liability of 1000 shares no because the issue is already over subscribed so there is no further liability on the part of X but how do we logically look at this issue the total issue made by us was for ten thousand shares out of which we got six thousand shares has marked application what is the shortfall the shortfall is for ten thousand minus six thousand four thousand is the shortfall out of this four thousand balance how much did we get a smart application from X we got a total of five thousand shares as Mark application from X we need at four thousand we got five thousand so there is no shortfall in this case hence X does not have any further liability in this case when the issue has been oversubscribed let us make some changes to the examples we discussed earlier and understand this concept a bit more in detail the company has issued 10,000 shares out of which six thousand have been underwritten by X the public subscribe for nine thousand shares in total out of which four thousand we're mark application and five thousand we're unmarked application which means the application which which had the marking of X the underwriter are four thousand and the balance shares are unmarked application now can we say that since X had agreed to underwrite six thousand shares and we have received only four thousand mark application the liability of X is two thousand no it is too quick to conclude that because if X we'll add for the 2000 shares we'll have a total of eleven thousand chips then how do we tackle with this issue the out of the ten thousand shares which were issued to the public how what is the number of unmarked application unmarked application is five thousand if I remove five thousand from ten thousand the gross liability of X the cross liability of X will become five thousand how much has X and return six thousand so X must ensure that these five thousand shares are filled up how many mark application we got we got a total of smart application 4000 5000 minus four thousand one thousand is the net liability of X so X has to subscribe for one thousand shares in this case now how does the math work out of ten thousand shares four thousand is marked application plus five thousand unmarked application plus one thousand of liability of X so total becomes ten thousand ten thousand ten thousand eight matches friends let us do a small change to the problem we discussed earlier and see how it can be applied in this case company has made an issue for 10,000 shares this is the total issue size out of this 10,000 shares ex has under written six thousand shares ex has underwritten six thousand shares after the issue is completed the company realized that it has got applications for application received for nine thousand shares out of these nine thousand shares seven thousand was marked and two thousand is unmarked seven thousand is mark and two thousand is unmarked now there is a shortfall of one thousand shares will X be liable to take that one thousand shares look at it no because X had committed only four six thousand shares and the mark application which the company has received is already seven thousand shares which means X gave one thousand more shares than what it had committed so X will not have any further liability in this case how do we look at it from logically total issue size is 10 thousand unmarked application is mm so the shortfall becomes eight thousand now we understood that because X has given a commitment only for six thousand shares it is not responsible to subscribe for the additional two thousand shares because it committed six thousand it gave seven thousand so there is no further liability on account of X friends our company a limited had issued one crore shares to the public now say for example the employees the directors and all those people who are related or internal to the company they approached the management and said out of this 1 crore shares we are willing to take one lakh shares out of one crore shares we they are willing to take one lakh shares now if one lakh shares are being issued to employees and directors how many shares will be sure to public the public the company you only 99 lakhs shares to the public in such a case the guidelines are very clear that the underwriting commission should be paid only on this 99 lakh shapes which has been issued to public the Commission the portion which is issue which is not issued to the public on such portion underwriting Commission is not payable [Music]