Explain the statutory provisions for allotment of shares.

Answer: Allotment of shares means the distribution of shares by the Board of Directors to the applicants. It converts an offer (application) into a contract, and the applicant becomes a member. The Companies Act, 2013 and SEBI regulations lay down the following statutory provisions for allotment:

1. Registration of prospectus: Shares can be allotted only after a copy of the prospectus has been filed with the Registrar of Companies on or before the date of its publication.
2. Minimum subscription: No allotment can be made unless the minimum subscription stated in the prospectus (as per SEBI, 90% of the issue size) has been received. If it is not received within 30 days from the date of issue of the prospectus (or the period specified by SEBI), the application money must be refunded within the prescribed time; on delay, the directors are liable to repay it with interest at 15% p.a.
3. Application money: The amount payable on application must not be less than 5% of the nominal value of the share or such other amount as specified by SEBI (as per SEBI, at least 25% of the issue price in a public issue).
4. Separate bank account: All application money must be kept in a separate account with a scheduled bank and can be used only for adjustment against allotment or for refund.
5. Opening of subscription list: Allotment can be made only after the subscription list has been opened (and kept open for the minimum period prescribed by SEBI) after the issue of the prospectus.
6. Listing permission: The company must apply to one or more recognised stock exchanges for permission to list the shares before issuing the prospectus. If permission is refused, the allotment becomes void and the money must be refunded.
7. Allotment in demat form and basis of allotment: In a public issue, securities are allotted only in dematerialised form; in case of oversubscription the basis of allotment is finalised in consultation with the designated stock exchange.
8. Return of allotment: Within 30 days of allotment, the company must file a return of allotment (Form PAS-3) with the Registrar of Companies, giving details of shares allotted and the allottees.
9. Share certificates: Share certificates must be issued within two months of allotment (or the shares credited to demat accounts).

An allotment made in contravention of these provisions is irregular and voidable at the option of the applicant, and the directors at fault are liable to penalty.