A company invited applications for 25,000 equity shares of Rs10 each and received 30,000 applications along with the application money of Rs.4 per share. Which of the following alternatives can be followed?I. Refund the excess applications.II. Make pro rata allotment to all the applicants, and refund the excess application money.III. Not to allot any shares to some applicants, full allotment to some of the applicants and pro rata allotment to the rest of the applicants.IV. Not to allot any shares to some applicants and make pro rata allotment to other applicants.V . Make pro rata allotment to all the applicants and adjust the excess money received towards call money.a)Only (II) aboveb)Both (I) and (IV) abovec)All (I), (II), (III), (IV) and (V) aboved)Only (III) aboveCorrect answer is option 'C'. Can you explain this answer?

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A company invited applications for 25,000 equity shares of Rs10 each and received 30,000 applications along with the application money of Rs.4 per share. Which of the following alternatives can be followed?
I. Refund the excess applications.
II. Make pro rata allotment to all the applicants, and refund the excess application money.
III. Not to allot any shares to some applicants, full allotment to some of the applicants and pro rata allotment to the rest of the applicants.
IV. Not to allot any shares to some applicants and make pro rata allotment to other applicants.
V . Make pro rata allotment to all the applicants and adjust the excess money received towards call money.

a)
Only (II) above
b)
Both (I) and (IV) above
c)
All (I), (II), (III), (IV) and (V) above
d)
Only (III) above

Correct answer is option 'C'. Can you explain this answer?

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Test: Issue, Forfeiture And Reissue Of Shares - 4

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A company invited applications for 25,000 equity shares of Rs10 each a...

Possible explanation:

Alternatives for handling excess applications in a share issue:

I. Refund the excess applications.
- The company could return the application money to applicants whose applications exceed the number of shares available for allotment. This option may be suitable when the excess applications are relatively few and the company does not want to undertake the task of allotting shares to a larger number of applicants.

II. Make pro rata allotment to all the applicants, and refund the excess application money.
- The company could distribute the available shares proportionately among all the applicants who applied, based on the number of shares they applied for. Any remaining money collected as application money could be returned to the applicants, either by cheque or through electronic methods. This option may be fairer to all applicants, as everyone gets some shares and some money back, but it may not satisfy the demand of some applicants who wanted more shares.

III. Not to allot any shares to some applicants, full allotment to some of the applicants and pro rata allotment to the rest of the applicants.
- The company could use a combination of methods, such as giving full allotment to some applicants who applied for a small number of shares, not allotting any shares to some applicants who applied for a large number of shares, and making pro rata allotment to the remaining applicants based on their position in a random or merit-based selection. This option may be more complex to administer, but may take into account factors such as the size of the shareholding, the past record of the applicants, or the strategic goals of the company.

IV. Not to allot any shares to some applicants and make pro rata allotment to other applicants.
- The company could choose to exclude certain applicants from the allotment process, for example, those who applied after a certain deadline, those who did not meet certain eligibility criteria, or those who did not submit the required documents. The remaining applicants could then receive shares in proportion to their applications, as in option II. This option may be simpler to apply, but may also exclude some legitimate applicants who could have received shares if the excess applications were handled differently.

V. Make pro rata allotment to all the applicants and adjust the excess money received towards call money.
- The company could allot shares to all applicants based on the pro rata method, as in option II, but instead of returning the excess application money, it could use it to reduce the amount of call money that the applicants would need to pay later. Call money is the amount payable by shareholders after the allotment of shares, usually in instalments, to complete the payment of the share value. This option may benefit both the company and the shareholders, as it would reduce the administrative costs and the financial burden of the shareholders, but it may also reduce the resources available for the company to invest in its projects.

Conclusion:
All the alternatives mentioned above could be followed by the company, depending on the circumstances of the share issue, the number of applications received, the preferences of the applicants, and the policies of the company. However, the company must ensure that its decision is fair, transparent, and in compliance with the relevant laws and regulations. The company should also communicate its decision to the applicants in a timely and clear manner, and provide them with the necessary instructions and documents for claiming their shares or refunds.

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A company invited applications for 25,000 equity shares of Rs10 each and received 30,000 applications along with the application money of Rs.4 per share. Which of the following alternatives can be followed?I. Refund the excess applications.II. Make pro rata allotment to all the applicants, and refund the excess application money.III. Not to allot any shares to some applicants, full allotment to some of the applicants and pro rata allotment to the rest of the applicants.IV. Not to allot any shares to some applicants and make pro rata allotment to other applicants.V . Make pro rata allotment to all the applicants and adjust the excess money received towards call money.a)Only (II) aboveb)Both (I) and (IV) abovec)All (I), (II), (III), (IV) and (V) aboved)Only (III) aboveCorrect answer is option 'C'. Can you explain this answer?

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A company invited applications for 25,000 equity shares of Rs10 each and received 30,000 applications along with the application money of Rs.4 per share. Which of the following alternatives can be followed?I. Refund the excess applications.II. Make pro rata allotment to all the applicants, and refund the excess application money.III. Not to allot any shares to some applicants, full allotment to some of the applicants and pro rata allotment to the rest of the applicants.IV. Not to allot any shares to some applicants and make pro rata allotment to other applicants.V . Make pro rata allotment to all the applicants and adjust the excess money received towards call money.a)Only (II) aboveb)Both (I) and (IV) abovec)All (I), (II), (III), (IV) and (V) aboved)Only (III) aboveCorrect answer is option 'C'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about A company invited applications for 25,000 equity shares of Rs10 each and received 30,000 applications along with the application money of Rs.4 per share. Which of the following alternatives can be followed?I. Refund the excess applications.II. Make pro rata allotment to all the applicants, and refund the excess application money.III. Not to allot any shares to some applicants, full allotment to some of the applicants and pro rata allotment to the rest of the applicants.IV. Not to allot any shares to some applicants and make pro rata allotment to other applicants.V . Make pro rata allotment to all the applicants and adjust the excess money received towards call money.a)Only (II) aboveb)Both (I) and (IV) abovec)All (I), (II), (III), (IV) and (V) aboved)Only (III) aboveCorrect answer is option 'C'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A company invited applications for 25,000 equity shares of Rs10 each and received 30,000 applications along with the application money of Rs.4 per share. Which of the following alternatives can be followed?I. Refund the excess applications.II. Make pro rata allotment to all the applicants, and refund the excess application money.III. Not to allot any shares to some applicants, full allotment to some of the applicants and pro rata allotment to the rest of the applicants.IV. Not to allot any shares to some applicants and make pro rata allotment to other applicants.V . Make pro rata allotment to all the applicants and adjust the excess money received towards call money.a)Only (II) aboveb)Both (I) and (IV) abovec)All (I), (II), (III), (IV) and (V) aboved)Only (III) aboveCorrect answer is option 'C'. Can you explain this answer?.

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