Underwriting in public shareholding companies
Underwriting in public shareholding companies
1. Subscription
2. Public shareholding companies
3. The law of subscription in public shareholding companies
4 . Types of subscription
1. Subscription
IPO is the initial public offering of shares in public joint-stock companies, so these companies offer their shares to the public buyers; By listing them on the stock market,[1] and underwriting is defined as the process of selling shares of companies for the first time to a group of investors.[2] Among other definitions of underwriting is the first sale of shares of a company; By offering its securities for public subscription, and most of the companies that offer their securities for subscription are small companies that seek to develop their capital; By relying on increasing the stock of their shares in the public financial market.
2. Public shareholding companies
Public shareholding companies are companies that seek to issue securities; By relying on public subscription to contribute to offering it in the stock market; To circulate them between investors and shareholders, and reliance is placed on trading these papers to develop companies, [4] Public joint stock companies are defined as establishments that depend on the stock market; free trade to the trades. [5] Another definition of public shareholding companies is companies whose shares can be purchased through the public; in order to twithmong them in the financial markets, it must be careful to maintain the legal limit of its capital.
3. The law of subscription in public shareholding companies
The subscription law in public shareholding companies is part of the company's law, and it includes a set of legal and legislative articles that cover the process of subscribing to shares in public shareholding companies.
Below is information on the most important articles of the subscription law:
Covering the value of founders’ shares: It is the legal article that It consists of the following points:
The founders of public shareholding companies must cover all the shares that were subscribed for during the signing of their founding contract, provided that the percentage of subscribed shares in financial institutions and banks does not exceed 50% of the value of the capital, and that the number of individuals among the founders is not less than fifty people.
The percentage of the founder or group of founders in the joint-stock company should not exceed 75% of the founding contribution to the capital. The remaining percentage of the shares must be offered for public subscription in accordance withby the Securities Law.
The founders of the Public Shareholding Company are prohibited from subscribing to the shares offered during the incorporation phase, but they may contribute to covering the remaining shares after three days have passed from the end of the subscription.
Prohibition of disposal of the share used in incorporation and exception to the prohibition: It is a legal article consisting of the following points: At least two years before the date of incorporation of the public shareholding company, it is prohibited to deal or dispose of its founding share.
The following are excluded from the prohibition in the previous point:
the transfer of ownership of the founding share to the heirs of the founder or founders.
The transfer of ownership of the founding share from one founder to another in the company.
the transfer of ownership of the share to another person; Through the issuance of a judicial decision or sale by public auction.
Covering the value of shares: It is a legal article that takes into account the provisions of any other subscription law and is keen to cover the value of shares by relying on an underwriter for coverage. The law allows the board of directors of the public shareholding company or its founders to cover its shares. By relying on one or more underwriters.
The basis for subscribing to shares: It is the legal article consisting of the following points: It is not permissible for more than one person to participate in submitting an application for subscription to the offered shares, and it is prohibited for the subscription to take place in a fictitious manner or using fictitious names; This leads to the invalidity of the subscription.
Subscription in the shares of public shareholding companies must be implemented in a manner consistent with the provisions of the Subscription Law and all applicable laws. Providing the names of subscribers to the Companies Controller: It is the legal article that stipulates the need to provide the company with the names of subscribers to the Companies Controller, and the amount of shares for each of them, within a period not exceeding one month from the date of closing the subscription for the company’s shares. Allocation of shares: If the subscription in the value of the shares of the public shareholding company exceeds the number of shares that were offered for subscription, the company is committed to allocating the value of its shares offered to the subscribers, based on the applicable legislation and regulations. Returning the excess sums when allocating shares: It is the legal article that defines the company’s responsibility to return the sums of money over the value of its shares that were offered for subscription.
This legal article must be implemented within a period not exceeding one month from the date of issuing the decision to allocate shares or close the subscription. If that number of the provisions of this legal article is not implemented, the beneficiaries of the amounts will have a financial interest, and it will be calculated from the beginning of the month following the month stipulated by law.
4 . , Types of subscription
Subscription in public shareholding companies is divided into two types:
The constituent subscription of the company: it is the subscription that is applied within the company’s capital when it is in the incorporation stage; where half of the value of the company’s capital is offered for subscription, and many opinions have emerged about the nature of the adaptation of the subscription contract for the establishment of public shareholding companies, and the following are the most important opinions about that: Incorporation stage, represented by the founders in their capacity as agents.
The second opinion: It is the opinion that considers subscription as a contract between the founders and the subscriber, given that the company is still in the incorporation stage, and does not have an independent legal personality until it is officially established.
Subscription following the establishment of the company: It is the subscription that is applied to the shares of existing companies. Because of the quest to increase its capital, and this subscription is a contract between the subscribers and the company that represents itself with an independent and legal personality.