Based on following answer the question.
Bharat Ltd. has been registered with the capital as ₹50,00,000 divided into 5,00,000 shares of ₹10 each. 3,00,000 shares of ₹10 each are offered by the company to the public for subscription, amount payable as ₹4 on application, ₹3 on allotment and the balance on call. The company received application for 2,70,000 shares and the company finalised the allotment accordingly. The company did not make the final call. The Company received all money except allotment money on 5,000 shares held by Rahul. His shares were forfeited.
In the case of Bharat Limited the shares have been :
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Under subscribed
Bharat Ltd. offered 3,00,000 shares but received applications for only 2,70,000 shares. When the shares applied for are fewer than the shares offered, the issue is under subscribed, and allotment is made only for the shares applied for.
Option (1) Fully subscribed — Incorrect. That needs applications for all 3,00,000 shares offered.
Option (2) Over subscribed — Incorrect. That needs applications for more than 3,00,000 shares.
Option (4) Partly subscribed — Incorrect. This is not a term used for a share issue; the book calls a shortfall in applications under subscription.
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