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Over Subscription of Shares: Proportionate Allotment to all Shareholders Video Lecture | Accountancy Class 12 - Commerce

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FAQs on Over Subscription of Shares: Proportionate Allotment to all Shareholders Video Lecture - Accountancy Class 12 - Commerce

1. What is over subscription of shares?
Ans. Over subscription of shares occurs when the number of shares applied for by shareholders exceeds the number of shares available for allotment. It typically happens during an initial public offering (IPO) or a rights issue.
2. How does proportionate allotment work in over subscription of shares?
Ans. Proportionate allotment is a method used to allocate shares in an equitable manner among shareholders during an over subscription. It means that each shareholder will receive a proportionate number of shares based on their existing shareholding relative to the total number of shares applied for.
3. Why is proportionate allotment important in over subscription of shares?
Ans. Proportionate allotment ensures fairness and equal treatment of shareholders in the allocation of shares during an over subscription. It prevents any single shareholder from receiving an unfair advantage by allowing all shareholders to participate in the allotment process based on their proportional ownership.
4. What happens if there are still unallocated shares after proportionate allotment in over subscription?
Ans. If there are still unallocated shares after proportionate allotment, these shares are typically distributed through a lottery system among shareholders who have applied for additional shares. This ensures that all shareholders have an equal chance of receiving additional shares, regardless of their initial shareholding.
5. Can shareholders sell their allotted shares in case of over subscription?
Ans. Yes, shareholders can sell their allotted shares in case of over subscription. Once the shares are allotted, shareholders have the freedom to sell them in the secondary market. However, it is important to note that the demand for the shares in the secondary market may vary, and shareholders may not always be able to sell their shares at their desired price.
49 videos|111 docs|56 tests

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