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Guru Ltd. Invited Applications for Issuing 5,00,000 Equity Shares of Rs 10 Each at a Premium of Rs 5 per Share. Because of Favourable Market Conditions, the Issue Was Over-subscribed and Applications for 15,00,000 Shares Were Received Suggest the Alternatives Available to the Board of Directors for the Allotment of Shares. - CBSE (Arts) Class 12 - Accountancy

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Question

Guru Ltd. invited applications for issuing 5,00,000 equity shares of Rs 10 each at a premium of Rs 5 per share. Because of favourable market conditions, the issue was over-subscribed and applications for 15,00,000 shares were received

Suggest the alternatives available to the Board of Directors for the allotment of shares.

Solution

The following three alternatives to the Board of Directors are:

a. Reject the excess application of 10,00,000 shares.
b. Allot shares to all the share applicants on pro-rata basis.
c. Reject few applications and allot shares on the proportionate basis to the remaining applicants.

  Is there an error in this question or solution?
Solution Guru Ltd. Invited Applications for Issuing 5,00,000 Equity Shares of Rs 10 Each at a Premium of Rs 5 per Share. Because of Favourable Market Conditions, the Issue Was Over-subscribed and Applications for 15,00,000 Shares Were Received Suggest the Alternatives Available to the Board of Directors for the Allotment of Shares. Concept: Share Capital - Issue and Allotment of Equity Shares.
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