CUET Preparation Today
In the case of under subscription of shares. |
Shares are allotted only when the company receives the subscription and application money on minimum subscription as stated in the prospectus. Shares are allotted to all applicants without considering anything All the issued shares are allotted to all applicants proportionally None of these |
Shares are allotted only when the company receives the subscription and application money on minimum subscription as stated in the prospectus. |
The correct answer is option 1- Shares are allotted only when the company receives the subscription and application money on minimum subscription as stated in the prospectus. In the case of under subscription of shares, Shares are allotted only when the company receives the subscription and application money on minimum subscription as stated in the prospectus.
Under subscription is a situation where number of shares applied for is less than the number for which applications have been invited for subscription. For example, a company offered 2 lakh shares for subscription to the public but the applications were received for 1,90,000 shares, only. In such a situation, the allotment will be confirmed to 1,90,000 shares and entries shall be made accordingly. However, it must be ensured that the company has received the minimum subscriptions and the company will have to refund the entire subscription amount received.
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