Read the following passage carefully and answer the questions.
X Ltd. issued 30,000 shares to the public having Face value ₹100 at 10% premium. Money is receivable as follows:
Application = ₹40 (including premium)
Allotment = ₹45
First and Final call = Remaining amount
The public applied for 50,000 shares. The company rejected application for 10,000 shares and made a pro rata allotment to the rest of the applicants. A shareholder applying for 400 shares, didn't pay the allotment and call money and his allotted shares were forfeited by the company. Later, the forfeited shares were reissued at ₹80 each as fully paid.
What type of subscription took place?
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Over subscription
The company offered 30,000 shares and the public applied for 50,000. When applications are received for more shares than are offered, the issue is over subscribed, and the directors must reject some applications, allot pro rata, or do both (as here).
Why the other options are incorrect:
Option (1) Full subscription — Incorrect. That would mean applications for just the 30,000 shares offered.
Option (2) Under subscription — Incorrect. That would mean applications for fewer than 30,000 shares.
Option (4) Partial Subscription — Incorrect. A partly taken-up issue is again a shortfall, the opposite of what happened here.
NCERT (2026-27 edition): |