Correct steps in the procedure of issue of shares are- (A) Allotment…

Correct steps in the procedure of issue of shares are-

(A) Allotment of Shares
(B) Calls in Arrears
(C) Issue of Prospectus
(D) Receipt of Applications

Choose the correct answer from the options given below:

Answer & explanation

Correct answer: option 1

The correct answer is Option (1) → (C), (D), (A), (B)

A company cannot allot shares before anyone applies, and nobody can apply before the company invites the public. Calls in arrears can arise only after shares are allotted and a call falls due. The order is:

(C) Issue of Prospectus — the invitation to the public to buy the shares.
(D) Receipt of Applications — investors apply with the application money.
(A) Allotment of Shares — made once minimum subscription is received.
(B) Calls in Arrears — the amount a shareholder fails to pay on allotment or on a call, so it comes last.

NCERT (2026-27 edition):
Issue of Shares – “… The important steps in the procedure of share issue are : Issue of Prospectus: The company first issues the prospectus to the public. Prospectus is an invitation to the public that a new company has come into existence and it needs funds for doing business.”

NCERT (2026-27 edition):
Issue of Shares – “… Receipt of Applications: When prospectus is issued to the public, prospective investors intending to subscribe the share capital of the company would make an application along with the application money and deposit the same with a scheduled bank as specified in the prospectus.”

NCERT (2026-27 edition):
Issue of Shares – “… Allotment of Shares: If minimum subscription has been received, the company may proceed for the allotment of shares after fulfilling certain other legal formalities.”

NCERT (2026-27 edition):
Calls in Arrears – “It may happen that shareholders do not pay the call amount on due date. When any shareholder fails to pay the amount due on allotment or on any of the calls, such amount is known as ‘Calls in Arrears’/‘Unpaid Calls’. Calls in Arrears represent the debit balance of all the calls account.”