CUET Preparation Today
| If the public applies for fewer shares than the shares offered to the public for subscription by the company, then the situation created is called: |
Under subscription Over subscription Pro-rata allotment None of these |
| Under subscription |
| Under subscription is a situation where number of shares applied for is less than the number for which applications have been invited for subscription. For example, a comapny offered 2 lakh shares for subscription to the public but the applications were received for 1,90,000 shares, only. In such a situation, the allotment will be confirmed to 1,90,000 shares and entries shall be made accordingly. However, as stated earlier, it must be ensured that the company has received the minimum subscriptions and the company will have to refund the entire subscription amount received. |
