The correct answer is option 2- (A)-(II), (B)-(I), (C)-(IV), (D)-(III).
| LIST 1 |
LIST 2 |
| (A) Over Subscription |
(II) Application received is more than shares issued |
| (B) Minimum subscription |
(I) Minimum amount that must be raised by issue of shares |
| (C) Under Subscription |
(IV) Application received is less than shares issued |
| (D) Private Placement |
(III) Allotment of shares without issue of prospectus |
* Over subscription occurs when there is a greater demand for a company's shares than the available supply. It means shares applied by the persons are more than the shares offered. This often happens when the company is financially strong and well-managed, attracting eager investors. To address over subscription, companies have three primary options: Accept some applications in full while rejecting others. Implement a pro-rata allotment, where each applicant receives a portion of the shares they applied for, ensuring some allocation to all investors, even if not the full amount. Utilize a combination of the first two approaches, which is the most commonly chosen method.
* Minimum subscription denotes the lowest amount of capital a company must raise through an Initial Public Offering (IPO) for it to be considered successful. If the company fails to reach this minimum subscription level, it must refund the collected funds to the investors.
* Under subscription arises when there are fewer requests for a company's shares than the available shares. This often occurs when the company lacks recognition or has a weak financial track record.
* Private placement serves as a means for a company to raise funds by selling shares to a select group of investors. This typically involves the issuance of a private placement offer letter. Under this, there is no need to issue prospectus by the company because persons to whom shares has to be offered are already known.
|
