Meaning and Nature of Underwriting:?Underwriting in the context of a company means undertaking a responsibility or giving a guarantee that the securities (shares and debentures) offered to the public will be subscribed for. The firms which undertake the guarantee are called underwriters. Underwriting is similar to insurance in the sense that it provides protection to the issuing company against the failure of an issue of capital to the public. Underwriting Commission:According to Sec. 76 of the Companies Act, 1956, the payment of underwriting commission is made if the following conditions are satisfied:The payment of commission is possible only when the same is authorized by the Articles;The commission paid or agreed to be paid does not exceedIn the case of shares, 5% of the price at which the shares are issued or the amount or rate authorized by the Articles, whichever is less, and In the case of debentures, 2½% of the price at which the debentures are issued or this amount or rate authorized by the Articles, whichever is less;Needless to say that the above rate of underwriting commission is the maximum rate. It may be given at a lower rate if possible. As per SEBI Guidelines also, the rate of underwriting commission must not exceed @ 2. 5% of the issue price. Therefore, the Underwriting commission on shares as per SEBI guidelines is up to 2. 5%.