Types of AllotmentThere are three methods of expanding the share capital by an existing company:
- By fresh issue of shares to the existing shareholders in proportion to the shares held by them (right shares or bonus shares).
- By making an offer, inviting the public in general to subscribe the share, which is generally known as initial public offer (IPO).
- By making a bulk allotment to an individual, company, venture capitalist or any other person through a fresh issue of shares. This process of bulk allotment is known as preferential allotment.
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