Distinguish between Over-Subscription and Under Subscription.

Over-subscription

  • Shares Applied  : Number of shares applied is more than the shares offered for subscription.
  • Acceptance : All the applications are not accepted. Some are rejected. Alternatively, shares are allotted on pro-rata.
  • Refund :  Excess application money is to be refunded or adjusted towards allotment.
  • Minimum Subscription : In case over-subscription, company does not face such a problem.

Under-subscription

  • Shares Applied  : Number of shares applied is less than the shares offered for subscription.
  • Acceptance : All the applications for shares are accepted, ie., full allotment is made
  • Refund : As all the applications are accepted, there is no excess money to be refunded.
  • Minimum Subscription : The company may face the problem of Minimum Subscription.

Tags: B.Com

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