Question

Distinguish between over- subscription and under- subscription

Answer 1

Explanation:

Over-subscription

Shares Applied : Number of shares applied is more than the shares offered for subscription.

Acceptance : All the applications are not accepted. Some are rejected. Alternatively, shares are allotted on pro-rata.

Refund : Excess application money is to be refunded or adjusted towards allotment.

Minimum Subscription : In case over-subscription, company does not face such a problem.

Under-subscription

Shares Applied : Number of shares applied is less than the shares offered for subscription.

Acceptance : All the applications for shares are accepted, ie., full allotment is made

1. Refund : As all the applications are accepted, there is no excess money to be refunded.