question_answer

ABC Ltd invited applications for 10,000 shares of Rs. 10 each. Applications were received for 15,000 shares. Name the kind of subscription. Give three alternatives for allotting shares in this form of subscription.

Answer:

Oversubscription. Three alternatives for allotting shares are: (i) Reject the excess applications received for 5,000 shares. (ii) Pro-rata allotment in the ratio of 10 : 15. (iii) Full allotment to some applicants, pro-rata to some applicants and reject the remaining applications. e.g. applicants of 2,000 shares are allotted in full, applicants for 1,000 shares are rejected and pro-rata allotment is  made for the balance shares, i.e. applicants for 12,000 shares are allotted 8,000 shares.