Big companies require to obtain several financial services from outside or external sources (i.e., outsourcing) because they don’t possess the infrastructure and capability to perform such services. These include the following:

(i)    Underwriting of Securities. Most of the companies get their new issues of shares underwritten with the underwriters. Underwriters give a guarantee to the company that entire new issues will be sold to the public. In case, some securities are not subscribed to by the public, the underwriters undertake to purchase the. Underwriters get a small commission per share for their services.

(ii)    Merchant Banking. Merchant bankers sponsor capital issues f companies. They help the company in drafting of prospectus, and application forms, compliance with legal formalities, appointment of registrar to deal with the share applications and transfers, listing of securities, arrangement of underwriters, selection of brokers, publicity, etc.

(iii)    Registration of Shares. Specialized firms known as Registrars to issues deal with share applications, registration of share transfers, etc.

(iv)    Depositories. They hold shares of shareholders of different companies in
dematerialized (intangible or paperless) form.

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