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Over Subscription

Over subscription refers to a situation where the number of shares subscribed by the public is larger than the number of shares offered by the company. In such a situation, the company may take the following actions:
  • Reject some applications in full and refund the application money.
  • Allot the shares on a pro-rata basis, for example, 3:5, that is, three shares to be allotted for every five shares applied.
  • Any combination of the above two.

Illustration 6


A Ltd. is a company with an authorized share capital of ₹ 50,00,000 in equity shares of ₹ 10 each, of which 3,00,000 shares had been issued and fully paid on 30th June 2011. The company proposed to make a further issue of 50,000 of these ₹ 10 shares at a price of ₹ 14 each, the arrangements for payment being as follows:

  1. ₹ 2 per share payable on application, to be received by 1st July 2011.
  2. Allotment to be made on 10th July 2011 and a further ₹ 5 per share (including the premium) to be payable.
  3. The final call for the balance to be made, and the money received by 30th April 2012.
    Applications were received for 1,77,500 shares and were dealt with as follows:
    1. Applicants for 2,500 shares received allotment in full.
    2. Applicants for 15,000 shares received an allotment of one share for every two applied for; no money was returned to these applicants, the surplus on application being used to reduce the amount due on allotment.
    3. Applicants for 1,60,000 shares received an allotment of one share for every four applied for the money due on allotment was retained by the company, the excess being returned to the applicants.
    4. The money due on final call was received on the due date.



Journal of A Ltd.

Working Note:


Calculation for Adjustment and Refund

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