Question

Answer in one Sentence only :
What do you understand by Pro-rata allotment of shares?

Answer 1

When shares subscribed by the public are greater than the shares offered by the company, it results in over-subscription. In such cases, the company makes allotment on proportionate basis, which is known as pro-rata allotment of shares. For example, the company may allot 1500 shares to an applicant who applied for 2000 shares.