The shares are offered by a company and public subscribed more than the number of shares offered for issue. The possibilities arise in this case are :
A. Allot shares on Pro-Rata basis to all the applicants
B. Public never subscribe more than number of share offered.
C. Reject the excess applications.
D. SEBI guidelines says only 10% of over subscription can be made on pro-rata basis rest amount has to be refunded.
E. Pro-rata allotment to some applicants and full allotment to some application.
Choose the correct answer from the options given below :
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → A, C and E only
When an issue is over-subscribed, the directors may accept some applications in full and reject the others, make a pro-rata allotment to all, or combine the two.
(A) Allot shares on Pro-Rata basis to all the applicants — True. Pro-rata allotment to all is one of the three ways.
(B) Public never subscribe more than number of share offered. — False. Over-subscription is common, especially for well-managed companies.
(C) Reject the excess applications. — True. Some applications may be accepted in full and the rest rejected, with their money refunded.
(D) SEBI guidelines says only 10% of over subscription can be made on pro-rata basis rest amount has to be refunded. — False. No such 10% limit applies to pro-rata allotment.
(E) Pro-rata allotment to some applicants and full allotment to some application. — True. This is the combination of the two methods, the most common in practice.
NCERT (2026-27 edition): |