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Under Subscription of Shares

Under subscription means that the number of shares subscribed by the public is lower than the number of shares offered by the company.


In case of under subscription, the company will allot shares to all the applicants and the accounting entries and calculations (i.e. application money, allotment money, call money) will be done based on the number of shares applied and allotted.

However, one must keep in mind that the company cannot allot the shares if the minimum subscription criterion as per The Companies Act, 1956, is not met with.

The journal entries in this case will be the same as given in the ‘Issue of Shares at Par’.

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