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Question
Explain the following term/concept.
Allotment of shares
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Solution
(a) Allotment of shares means the company allots (to give) shares to the general public. Allotment means the distribution of shares among the applicants. When a public company wants to issue the shares to the general public, it has to issue prospectus to invite the general public to subscribe to its shares.
(b) In response to it, the general public may apply for shares of the company, they are known as 'Share Applicants'. The Board of Directors takes the decision regarding the allotment of shares by passing a resolution.
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Answer in brief.
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(c) Board Resolution
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