Formation of a Syndication

Once a prospectus has been put out into circulation, the Underwriters and securities’ dealers handling the distribution of the securities form a syndicate, called an “Issuing Syndicate”.

The syndicate is usually formed around the particular Underwriter, which took the initiative for arranging the securities issue and led negotiations with the Issuer. This Underwriter is called the “Lead Underwriter” or “Leader of the Syndicate”.

Greenberg, Hornblower, Deschenaux & Partners usually finds the Leader of the Syndicate.

Greenberg, Hornblower, Deschenaux & Partners understands its limits, and recognize that they cannot work without the great investment bankers of Europe and the United States. That being said, it is also important to remember that these same bankers will not finance a company that is not well structured from the beginning of its existence or distribute an Issue that is not drafted in a highly professionally manner.


The duties and the responsibilities arising out of the syndicate depend on which type of syndicate is being foreseen: the “Western account” or the “Eastern account”.


Under the western account, the responsibility of each member of the syndicate is limited to its share allocation; that is how many shares it has undertaken to sell.


In the eastern account, the responsibility of each member is not limited to its allocation but to the entirety of the shares left unsold at the time of the securities issue. In theory, therefore, its responsibility can be for the total of the securities issue if none of the shares have been sold.

GHD LLP (155)