Question

A company issued 12,500 shares and receive application for 25,000 shares company wants to allot shares to everyone who has applied what will be the ratio for allotment

Answer 1

Answer:

Oversubscription is the case when a company receives application more than the issued shares.

These extra 5000 shares can be treated in the following ways:

1. The company may refund the amount received on these 5000 excess shares.

2. Prorata allotment can be made in which the shares can be re-adjusted as per the conditions.

3. The company can resolve the problem be rejecting some of the shares, full allotment to some shares and making pro-rata allotment to the rest of the shares.

4. Reject some of the shares and make pro-rata allotment to rest of the shares.

5. The company can even make pro-rata allotment to all shares and the excess money can be used in fulfilling the calls money.