Question

What a Company will do when there is over-subscription of shares?

Answer 1

Only the number of shares that a company has made available for subscription by the general public may be distributed. Therefore, a business may select one of the three options listed below:

1. First Alternative: Rejecting Excess Applications: Excess applications are rejected, and full allotment is made to all the remaining applicants.
2. Second Alternative: Pro-rata allotment: All the applicants are allotted shares on proportional basis.
3. Third Alternative: Some applications are accepted in full, some are rejected and others are allotted shares on proportional basis.