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Specimen Broker Agreement for Share Issue — Format and Brokerage 2026

Specimen broker agreement for public share issue. Format, brokerage rates, SEBI ICDR compliance, broker obligations, specimen clauses.

VS Vikas SharmaTax & Compliance Expert
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March 25, 2026
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Last updated: September 2026Verified against: Government sources

Specimen Broker Agreement explained: this guide covers what Specimen Broker Agreement means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.

Broker Agreement for Share Issue

In a public issue of securities: the company (through the Lead Manager) appoints brokers/syndicate members to: (a) market the issue to investors, (b) collect subscription applications, (c) process bids in the book-building process. The broker agreement governs: (a) the broker's obligations, (b) brokerage/commission rates, (c) compliance with SEBI ICDR Regulations, (d) liability and indemnity.

Key Clauses

1. Appointment: The Company/Lead Manager appoints (SEBI Registration No. ) as a Broker/Syndicate Member for the public issue of equity shares.

2. Broker's Obligations: (a) Market the issue to investors within the broker's network, (b) accept and process application forms/bids, (c) ensure KYC compliance of investors, (d) upload bids on the stock exchange platform (for book-building), (e) handle application money through the designated bank, (f) comply with SEBI ICDR Regulations and ASBA requirements, (g) not make any representation about the issue other than what is in the offer document.

3. Brokerage: The Company shall pay brokerage of % (typically 1-2%) of the subscription amount procured through the Broker. Under Section 40 of the Companies Act: brokerage shall not exceed 2% of the issue price. Brokerage is payable within [30] days of allotment. For retail applications through ASBA: brokerage is typically Rs. 10-20 per application (flat fee).

4. ASBA Compliance: All applications must be through ASBA (Application Supported by Blocked Amount) -- the broker ensures investors apply through their bank's ASBA facility. No physical application forms accepted.

5. Indemnity: The Broker indemnifies the Company against claims arising from the Broker's misrepresentation, unauthorized promises, or non-compliance with SEBI regulations.

6. Confidentiality: The Broker shall maintain confidentiality of all issue-related information until the offer document is made public.

SEBI Requirements

(a) Brokers must be SEBI-registered stock brokers or authorized sub-brokers, (b) all applications through ASBA/UPI -- no cash applications, (c) the broker must upload bids on the exchange platform in real-time during the book-building period, (d) the broker must ensure investors' PAN, demat account, and bank account are valid, (e) brokerage payments are disclosed in the offer document.

Disclaimer: This article is for informational purposes only and does not constitute legal or professional advice. While every effort has been made to ensure accuracy based on the latest laws and amendments, readers should consult a qualified professional before acting on any information provided. For expert assistance, contact us.

Quick recapKey facts & short answers

Key Facts About Specimen Broker Agreement

  • Applies in: All states across India, under the relevant central law.
  • Mode: Mostly online via the official government portal.
  • Typical timeline: Ranges from a few days to a few weeks depending on the case.
  • Non-compliance: May attract penalties, interest or late fees.
  • Expert help: TaxClue completes Specimen Broker Agreement end to end for you.

What is the maximum brokerage for share issue?

Under Section 40 Companies Act: brokerage for share issue shall NOT exceed 2% of the issue price. For debentures: maximum 2.5%. In practice: brokerage is typically 1-1.5% for institutional investors and Rs. 10-20 per application for retail ASBA applications. Brokerage is payable only on SUCCESSFUL applications -- not on withdrawn or rejected bids. The brokerage amount is disclosed in the offer document (DRHP/RHP).

What is ASBA and why is it mandatory?

ASBA (Application Supported by Blocked Amount) is the system where the investor's application money is BLOCKED in their bank account (not transferred to the company) until allotment. If allotted: only the allotment amount is debited. If not allotted: the block is released. SEBI has made ASBA mandatory for ALL public issues -- no physical forms or cheque-based applications are accepted. Benefits: (1) investor's money earns interest during the issue period, (2) faster refunds (no refund needed -- just unblock), (3) reduced fraud risk.

Specimen Broker Agreement: a key compliance topic in Indian tax and corporate law that businesses and individuals must understand to remain compliant.

READY DRAFTBroker Agreement — Issue of Shares (Brokerage)

An agreement appointing a stock-broker to procure subscriptions to a company's issue of shares for brokerage, distinct from underwriting (no obligation to take up unsubscribed shares), under Section 40 of the Companies Act, 2013.

BROKERAGE AGREEMENT FOR ISSUE OF SHARES

THIS AGREEMENT is made at [City] on this [Day] day of [Month], 2026 BETWEEN:

[Company Name] Limited, a company incorporated under the Companies Act, 2013, having its registered office at [Address] (the "Company"); AND

[Broker Name / Firm], a SEBI-registered stock broker (SEBI Regn. No. [____]; Member of [Exchange]), having its office at [Address] (the "Broker").

Clause 1. Appointment. The Company appoints the Broker as a broker to procure applications from investors for the Company\'s issue of [__] equity shares of ₹[10] each at ₹[__] per share (the "Issue"), on the terms of the prospectus/offer document dated [__].

Clause 2. No Underwriting Obligation. It is expressly agreed that the Broker undertakes only to procure subscriptions and is NOT obliged to subscribe for or take up any unsubscribed portion of the Issue (i.e., this is a brokerage, not an underwriting, arrangement).

Clause 3. Brokerage. The Company shall pay the Broker brokerage at [__]% of the issue price on shares actually allotted against applications bearing the Broker\'s stamp/code. The rate of brokerage shall not exceed the ceiling permitted (customarily 1.5% for public issues), and shall be disclosed in the prospectus as required under Section 40.

Clause 4. Applications & Stamping. The Broker shall forward valid, completed application forms with application money to the Company\'s bankers to the issue within the Issue period; only applications bearing the Broker\'s code and resulting in allotment qualify for brokerage.

Clause 5. Compliance. The Broker shall comply with the SEBI (Stock Brokers) Regulations, 1992, SEBI (ICDR) Regulations, 2018, and applicable exchange bye-laws, and shall not make any representation beyond the prospectus.

Clause 6. Payment. Brokerage shall be paid within [30] days of allotment, subject to deduction of tax at source under the Income-tax Act, 1961 and levy of GST as applicable, against the Broker\'s statement of allotted applications.

Clause 7. Term & Termination. This Agreement is valid for the Issue and any extension thereof; it may be terminated by either party by [7] days\' written notice, without prejudice to brokerage already earned.

Clause 8. Governing Law & Arbitration. Governed by Indian law; disputes referred to arbitration under the Arbitration and Conciliation Act, 1996 / the relevant exchange arbitration mechanism, seat at [City].

IN WITNESS WHEREOF the parties have executed this Agreement on the date first above written.

For [Company Name] Limited

____________________
Director (DIN [____])		For [Broker Name]

____________________
Authorised Signatory (SEBI Regn. [____])

Witnesses: 1. ______________    2. ______________

▸ How to use & important notes
  • Brokerage differs from underwriting commission — a broker only procures subscriptions and does not guarantee the issue; payment is only on shares actually allotted against the broker's code.
  • Brokerage must be authorised by the Articles and disclosed in the prospectus (Section 40); customary ceiling for public issues is around 1.5% of issue price.
  • The broker must be registered with SEBI (Stock Brokers Regulations, 1992) and the issue must comply with SEBI (ICDR) Regulations, 2018 for a public/listed issue.
  • Deduct TDS and charge GST on brokerage; file the return of allotment in Form PAS-3 and reconcile brokerage to allotted applications.

Disclaimer: This is a general-purpose template for reference only. Facts, figures, stamp duty and clauses vary with your situation and state law — have it reviewed before use. Need this professionally drafted, stamped and filed? Talk to a TaxClue expert.

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Disclaimer: This article is for general informational purposes only and does not constitute professional tax, legal or financial advice. Laws, rates and due dates change and can vary by individual case — always verify with the relevant government source (e.g. mca.gov.in, incometax.gov.in) or consult a qualified professional before acting. TaxClue accepts no liability for decisions taken based on this content.

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Questions, answered

Short, direct answers to the 5 questions readers ask most on this topic.

Under Section 40 Companies Act: brokerage for share issue shall NOT exceed 2% of the issue price. For debentures: maximum 2.5%. In practice: brokerage is typically 1-1.5% for institutional investors and Rs. 10-20 per application for retail ASBA applications. Brokerage is payable only on SUCCESSFUL applications -- not on withdrawn or rejected bids. The brokerage amount is disclosed in the offer document (DRHP/RHP).

ASBA (Application Supported by Blocked Amount) is the system where the investor's application money is BLOCKED in their bank account (not transferred to the company) until allotment. If allotted: only the allotment amount is debited. If not allotted: the block is released. SEBI has made ASBA mandatory for ALL public issues -- no physical forms or cheque-based applications are accepted. Benefits: (1) investor's money earns interest during the issue period, (2) faster refunds (no refund needed -- just unblock), (3) reduced fraud risk.

Only SEBI-registered entities: (1) STOCK BROKERS registered with SEBI and members of BSE/NSE, (2) SYNDICATE MEMBERS appointed by the Lead Manager for book-building, (3) AUTHORIZED INTERMEDIARIES -- banks (for ASBA), depository participants. Unregistered individuals or firms CANNOT act as brokers for public issues. The broker must have adequate infrastructure for: accepting applications, uploading bids, processing payments, and maintaining records as per SEBI requirements.

Brokerage is disclosed in the OFFER DOCUMENT (DRHP/RHP) under the section 'Issue-Related Expenses.' The disclosure includes: (1) total estimated brokerage amount, (2) brokerage as a PERCENTAGE of the issue size, (3) breakdown by: broker category (institutional/retail), (4) payment terms. Additionally: the LEAD MANAGER's fee, underwriting commission, registrar's fee, and other issue expenses are disclosed. Total issue expenses typically range from 3-7% of the issue size -- brokerage is one component.

If a broker makes representations NOT in the offer document (promising guaranteed returns, minimum listing price, assured allotment): (1) the broker is liable to SEBI ACTION -- suspension/cancellation of registration, penalty, (2) the investor can claim DAMAGES from the broker (not the company -- the company's liability is limited to the offer document), (3) the Company/Lead Manager can TERMINATE the broker's appointment, (4) the indemnity clause requires the broker to compensate the Company for any loss. SEBI takes unauthorized promises very seriously -- it constitutes market manipulation/fraud.

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