Prorata allotment

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Jagjeet Kaur (Querist)

28 August 2016 I want to know about the adjustment of excess of application money in the case of oversubscripttion. where is excess amount of application adjusted first- in allotment or in premium? Like, Rs.100 are in excess of application money. Amount required for allotment is Rs.250( including Rs.50 premium). Will it be right to say that premium is received?

ACA Anurag

ACA Anurag (Expert)

28 August 2016 Dear jagjeet, Excess money recieved can be adjusted against premium subject to max to book value. and if any excess if left then should be refunded within 60 days of allotment

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Amol S Joglekar

Amol S Joglekar (Expert)

28 August 2016 take some numerical example so that you will get a better clarity......

Jagjeet Kaur

Jagjeet Kaur (Querist)

28 August 2016 Thanks for your reply. I still have doubt whether the amount of premium is considered to be received in above example or not. Rs.100 are in excess of application money and Rs.200 are required for allotment and Rs.50 for securities premium. Rs.100 are adjusted against allotment or premium? Next, if shares are to be forfeited securities premium a/c will be debited or not?

ACA Anurag

ACA Anurag (Expert)

28 August 2016 Dear Jagjeet, your query is little bit confusing. kindly text the complete fact kindly like if my response has helped you

Amol S Joglekar

Amol S Joglekar (Expert)

28 August 2016 your example is having some lacunae.....
try to redraft the numerical example......
face value......
amount received on application
shares applied for.....
shares allotted...... Please select the numerical with all such important details ok?
In principle, the company has to pass the resolution and get it pre approved from SEBI, for adjusting such a money, else it can NOT do so.

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Jagjeet Kaur

Jagjeet Kaur (Querist)

28 August 2016 numerical example- 1000 shares are issued & 2000 are applied for. shares are issued to 2000 applicants on prorata basis. Application money is Re.1, allotment money is Rs.2.5( including Re.0.5 premium). allotment money was called. A person who applied for 200 shares but was alloted 100 shares failed to pay allotment money. His shares are to be forfeited. Will it be right to debit securities premium a/c while forfeiting the shares?

Amol S Joglekar

Amol S Joglekar (Expert)

29 August 2016 debit cash/bank account 2000
credit share application money 2000
(being application money received on 2000 shares)

debit share application money 1000
credit share capital 1000
(being share application money transferred to share capital account)

debit share allotment 2500
credit share capital 2000
credit share premium 500
(being share allotment done for 1000 shares and allotment money called for along with premium)

debit share application money 1000
credit share allotment 1000
(being excess share application money adjusted to share allotment as per SEBI letter..... xxxx......)

debit share capital 300
debit share premium 50
credit share allotment 150
credit share forfeited 200

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