difference between irregular and regular share allotment
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Answer:
The effects of an irregular allotment of shares can be summarized as follows.
1. Voidable at the option of the Shareholder
An allotment which is not made after complying with the statutory requirements cited above, shall be considered as an invalid allotment and is void. But an irregular allotment is not an invalid allotment or a void allotment. An irregular allotment is only voidable at the instance of the allottee.
2. Time Limit
The option to avoid the allotment should be exercised within two months after the holding of the statutory meeting. In case of allotment by existing companies, the allottee should exercise his option within two months from the date of allotment.
3. Compensation
Every director, who knowingly authorizes the allotment, is liable to the applicant for any loss or damage incurred by him. They should make good the loss incurred by the allottee.
4. Ratification of the Allotment
The allottee alone can avoid the allotment but not the company. If the allottee never avoids the allotment, the company is bound by it as if it is a regular allotment. An irregular allotment made by the directors can also be ratified by the company at a general meeting subsequently
An allotment which is not made after complying with the statutory requirements cited above, shall be considered as an invalid allotment and is void. But an irregular allotment is not an invalid allotment or a void allotment. An irregular allotment is only voidable at the instance of the allottee.