The precise meaning of the term depends on the context in which it is used. Broadly it refers to the practice whereby a party assumes risk in exchange for a fee.

In the context of a share issue, it refers to the practice whereby an underwriter, usually a bank, agrees to subscribe for shares for which are not taken up by third parties. Underwriting provides certainty to the issuer that it will raise a minimum level of proceeds. Most rights issue by listed companies are underwritten.