What happens to excess application money if a lesser number of shares are allotted than applied for?
Answer & explanation
Correct answer: option 2
The correct answer is option 2- It is adjusted towards the amount due on allotment from the allottees.
When a lesser number of shares are allotted than applied for, the excess application money received from the applicants is adjusted towards the amount due on allotment from the allottees who received the shares. This adjustment is made to ensure that the applicants who are allotted shares pay the remaining amount after adjusting excess money for those shares at the time of allotment.