Distinction / Difference between brokers and underwriters



No

Brokers

Underwriters


(1)


A Broker is a person who buys and sells goods or assets for others.

An underwriter is a person or company that underwrites an insurance risk.


(2)

A broker is entitled to receive Commission only on those shares are debentures for which he procures subscription.


While an underwriter receives underwriting Commission on the entire issue which he underwritten.

(3)

Even where the shares or debentures are not offered to the public, the brokerage is payable on shares or debentures for which subscription is procured.


In case, of Underwriters, An underwriting commission is payable only on those shares or debentures which are offered to the public.

(4)

Broker’s percentage of  brokerage is determined as per prevailing rate

Underwriting commission is payable but it should not exceed 5% of the issue price of shares and 2.5 % of the issue price of debentures.


(5)

The brokers are entitled to brokerage even if the Article of Association of a company is silent on this point.

In case of Underwriters, only if the Article of an Association authorized underwriting Commission, the underwriters are entitled to get such Commission.


(6)

In case, of Broker, It is not required the name and address of each broker is to be disclosed in the prospectus.


While in case of underwriters the name of location and address of each one is to be shown in the prospectus.



See also...


1. Difference/Distinction between Shares and Stock | Company Law

2. When an instrument can be rectified and who may claim rectification?

3. Difference / Distinction Between Company and Partnership Firm (Company Law)

4. When a Private Company becomes a Public Company

5. Distinction / Difference between Memorandum of Association and Articles of Associations 

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