FAC2601
Assignment 1
Due on 23 August 2023
Question 1a: Liability of Craft Ltd towards Sontech Ltd
In this scenario, Craft Ltd is acting as an underwriter for Sontech Ltd's issue of 250,000 ordinary
shares at R3 each. Craft Ltd charges an 8% commission for their services. However, the public only
took up 235,000 of the shares that were offered. Let's break down the liability of Craft Ltd towards
Sontech Ltd:
1. Underwriting Agreement: When a company like Sontech Ltd issues new shares to the public,
they often enter into an underwriting agreement with a financial institution like Craft Ltd.
This agreement typically outlines the terms and conditions of the underwriting, including the
commission to be paid to the underwriter.
2. Commission: Craft Ltd is entitled to an 8% commission on the total value of the shares
offered, which is calculated as follows:
Commission = (8% of total value of shares offered)
Assignment 1
Due on 23 August 2023
Question 1a: Liability of Craft Ltd towards Sontech Ltd
In this scenario, Craft Ltd is acting as an underwriter for Sontech Ltd's issue of 250,000 ordinary
shares at R3 each. Craft Ltd charges an 8% commission for their services. However, the public only
took up 235,000 of the shares that were offered. Let's break down the liability of Craft Ltd towards
Sontech Ltd:
1. Underwriting Agreement: When a company like Sontech Ltd issues new shares to the public,
they often enter into an underwriting agreement with a financial institution like Craft Ltd.
This agreement typically outlines the terms and conditions of the underwriting, including the
commission to be paid to the underwriter.
2. Commission: Craft Ltd is entitled to an 8% commission on the total value of the shares
offered, which is calculated as follows:
Commission = (8% of total value of shares offered)
