Allotment of Shares¶
Allotment of Shares refers to the process in which shares of a company are allocated to investors who have applied for them in an initial public offering (IPO) or other share issuance. Here are some key points about allotment of shares:
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Allotment is the distribution of shares among the applicants based on the rules and procedures set by the issuing company and regulatory authorities.
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The allotment process typically follows a predetermined set of criteria, which may include factors like the number of shares applied for, the price at which shares were applied for, and the availability of shares.
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In an IPO, if the demand for shares exceeds the supply (oversubscription), shares are allocated proportionally among applicants. If the demand is lower than the supply, all applicants may receive their requested shares.
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The basis of allotment is a document that specifies how shares will be allocated among applicants. It is published after the IPO subscription period closes.
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Shares are usually credited to the demat accounts of successful allottees, and any excess application money is refunded to unsuccessful applicants.
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The timing of share allotment varies, but it typically occurs a few days after the closure of the IPO subscription period.
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Allotment is a critical step in the IPO process, as it determines which investors become shareholders of the company and at what quantity.
These points capture the essential aspects of the allotment of shares in an IPO or share issuance.
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