Allotment Of Shares: The Process
By Team Legistify / 2017-07-11
A guide to the various aspects of how shares are allotted by Companies in India.

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An allotment of shares is an acceptance by the company of the offer to take shares. The offer of shares is made on application forms supplied by the company. Generally, the offer is to accept a certain number of shares, or such less number of shares as may be allotted and that offer is accepted by the allotment, either of the total number mentioned in the offer or a lesser number, to be taken by the person who made the offer. When an application money is accepted, it amounts to an allotment. This constitutes a binding contract to make that number according to the offer and acceptance.

Overview

When a company receives an application for shares issued by means of a prospectus, it proceeds to allot shares on a predetermined basis (which is set out in the prospectus).  Where applications exceed the shares available, the allotment is made proportionally, though often applications for shares up to a stated number are accepted in full.

The allotment of shares is made by means of a letter of allotment. This entitles the recipient to a certificate for the number of shares stated in the letter. His title may, however, depend on his paying the sum previously stated as due on allotment.

It means an appropriation of a certain number of shares to an applicant in response to his application for shares. Allotment means a distribution of shares among those who have submitted a written application.

A guide to the various aspects of how shares are allotted by Companies in India.

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Get connected to the Best Lawyers and Chartered Accountants Near You!


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