Marked and Unmarked Applications

11/07/2020 1 By indiafreenotes

Marked Application: Generally, the forms are stamped with the name of the underwriters in order to differentiate the forms of one underwriter from that of others. Such stamped applications when received are called marked applications.

Unmarked Application: The application forms which are received by the company without any name of the underwriter are called unmarked applications.

Generally, shares or debentures issued by a Company are usually underwritten by a number of underwriters, in an agreed ratio of the whole issue. Each of the underwriter tries to sell the shares or debentures at the maximum in order to reduce the risk of liability. Therefore, a method of marking the application form with the stamp of the underwriters is adopted.

This facilitates to distinguish the forms of one underwriter from that of others and becomes clear to the Company to know the exact number of applications received through a particular underwriter. Such applications with stamp of an underwriter are called marked applications.

In some cases, public get the application form directly from the Company and such forms do not bear the stamp of underwriters. Such applications, which do not possess the stamp of underwriters, are called unmarked or direct applications.

Firm-underwriting applications

In the case of “Firm underwriting“, the underwriters take up the agreed number of shares or debentures ‘firm underwritten’ in addition to unsubscribed shares or debentures, if any. In such an instance, an underwriter is not allowed to set off his firm underwriting against his liability otherwise determined, that he will have to subscribe both for shares/debentures ‘underwritten firm’ and for shares which he has to take under the underwriting contract, ignoring firm underwriting. While computing the individual liability of the underwriters, the ‘firm underwriting’ can be dealt with in any of the following manner in the absence of any specific instructions:

(a) The “Firm underwriting” may be adjusted against the individual liability of each underwriter separately or may be treated at par with marked applications.

When firm underwriting is treated at par with marked applications

In such a case, the statement of liability of underwriters will be as under:

Gross Liability (agreed ratio-total shares underwritten)


Less: Marked applications including firm underwriting


Less: Unmarked application (ratio of gross liability)


Net liability


Total Liability


(b) The benefit of “firm underwriting” may be shared by all underwriters or firm underwriting may be treated at par with unmarked applications. In such case, the shares/debentures underwritten firm will be included in the unmarked forms. In such case, the state of liability of underwriters will appear as shown above except that Shares/Debentures underwritten firm by each underwriter will not be specifically adjusted against his individual liability but will be included in the total unmarked forms to be distributed amongst all underwriters in the ratio of their gross liability.