I am a student of class 12th (comm). the concept of pro rata allotment (under the heading over - subscripttion) has not been well explained in my book. Please tell me it's meaning , how to calculate it and its course of action
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What is meant by "pro - rata" allotment
Replies (4)
when the company have received the applications in excess of the actual allotment to be made than this method is used by the co.
let the co. have to made allotment of 1000 shares and applications r received for 1500 shares than co. will issue 10 shares to every 15 shares application received
When issue is over-subscribed, the company will have to allot to each applicant to each applicant according to the number of share applied by him. Ex- In case a company has offered 100000 shared to the public but the public has applied for 200000 shares, pro rata allotment would be made in proportion of 1:2.
Best of luck.
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