ABC Ltd Issues Rs 1000000 Shares For Public Subscription But Got Application Gor Rs 500000 Share Can ABC Ltd Allot Shares To There Applicant's Give. Reason
Answers
ABC Limited Company has issued 10,0000 shares to the public and the company has received applications for 500000 shares from the public. This situation is called under-subscription. In such cases, the allocation can be done for the number of shares subscribed for 5000 shares, which is less than issued shares.
Under the subscription, the number of shares subscribed by the public under the membership of the shares is less than the number of shares offered by the company. In the case of subscription, the company will allot shares to all applicants and accounting entries and calculations (i.e. application money, allocation money, call money) and will be based on the number of shares allocated. However, one should bear in mind that the company can not allocate shares to the company with minimum membership criteria as per the Companies Act, 1956. Journal entries in this case are given in the 'Issue of Share on Crossing'.
Received applications are less than those issued.
Received applications are less than those issued.
Generally, the situation of refund does not occur
No pro-rata allocation
Can not meet the minimum membership requirement under the membership
It sends a message that the company does not enjoy full confidence of investors in the capital market
Subscribed capital is less than the current capital.