What are the three method of allotment of shares?
to public through prospectus (public offer) through private placement. through a rights issue or a bonus issue.
What do you understand by allotment of shares?
Allotment arises when directors of a company earmark new shares to predetermined shareholders. These are shareholders who have either applied for new shares or earned them by owning existing shares. For example, in a stock split, the company allocates shares proportionately based on existing ownership.
What is the minimum subscription for allotment of shares?
After Allotment of shares by the company, the shareholders have to pay the remaining amount due on shares according to the procedures mentioned in the prospectus. The minimum subscription amount of 90 percent of the issue is to be achieved by the company in 60 days from the date of closure of the issue.
What is the maximum share application money?
Provided that the maximum tradeable lot in any case shall not exceed 100 shares. The minimum application moneys to be paid by an applicant along with the application money shall not be less than 25% of the issue price.
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What are the legal effects of allotment of shares?
Sec. 72(3) states that the validity of an allotment shall not be affected by any contravention of the foregoing provisions of this section, but,, in the event of any such contravention, the company, a fid every officer of the company who is in default, shall be punishable with fine which may extend to Rs. 5,000.
Who can allot shares?
Directors need authority to allot
If the company has only one class of shares, the directors have authority to allot shares of that class unless there is a restriction in the company’s articles (sec550, CA 2006).
What is application and allotment of shares?
Quick Reference. A ledger account used in the process of applications for and allotment of a company’s share capital. When the shares are offered, potential shareholders (applicants) apply to buy them on an application form with a cheque to cover the cost of the shares. This is known as the application process.
What is allotment of share answer in one sentence?
Share allotment is the creation and issuing of new shares, by a company. New shares can be issued to either new or existing shareholders. Share allotment can have implications for any existing shareholders share proportion. Typically, new shares are allotted to bring on new business partners.
What do you mean by transfer of share?
Transfer of shares refers to the intentional transfer of title of the shares between the transferor (one who transfers) and the transferee (one who receives). The shares of a public company are freely transferable unless the company has a valid reason to disallow the same.
What is required for allotment?
Statutory restrictions on the allotment of shares
Minimum subscription and application money (S-39) – The first essential requirement for a valid allotment is that of minimum subscription. The amount of minimum subscription has to be declared in the prospectus at the time when shares are offered to the public.
Can a company use share application money before allotment?
ROC Filing. The Companies Amendment Act 2017 withholds the issuers from utilising money that is raised through private placement until the allotment is made and the return of allotment is filed with ROC.
Who fixes the amount of minimum subscription?
The requirement for minimum subscription is determined through a ceiling limit. At present, the Government of India (GoI) has fixed the ceiling limit as ninety per cent. The ceiling limit should be applied to the total capital issued by the company.