Question

A company issued 1,00,000 Shares of Rs.100 each. These shares were underwritten as follows:

X - 30,000 Shares, Y - 50,000 Shares. The public applied for 70,000 Shares.

Determine the Liability of X, Y and the Company.

Answer 1

Unsubscribed shares = 1,00,000 – 70,000 = 30,000

Ratio of underwriting: X = 30,000/80,000 = `3/8`, Y = `(50,000)/(80,000)` = `5/8`

X’s liability = 30,000 × `3/8` = 11,250 shares (₹ 11,25,000)

Y’s liability = 30,000 × `5/8` = 18,750 shares (₹ 18,75,000)

Company’s liability = Nil

So,

• X: 11,250 shares (₹ 11,25,000)
• Y: 18,750 shares (₹ 18,75,000)
• Company: Nil