STAR Company Ltd. has recently come out with its public offer through FPO. Their issue was oversubscribed. The Board of Directors now wants to start the allotment process. Please advise the Board on:(a) Should the company set up allotment committee?(…

Answer: (a) Yes (b) By a letter of allotment / allotment advice (c) Within two months of allotment

(a) Yes. Since the issue is oversubscribed, a large number of applications must be scrutinised and a fair basis of allotment worked out quickly. The Board may therefore constitute an allotment committee (a committee of directors) and delegate the allotment work to it. The basis of allotment is finalised on a proportionate basis in consultation with the designated stock exchange, and the allotment committee (under powers delegated by the Board) or the Board passes the resolution for allotment.

(b) The company should send a letter of allotment (allotment advice) to the successful applicants, stating the number of shares allotted, and credit the shares to their demat accounts. Unsuccessful applicants are sent a letter of regret, and their application money is refunded or unblocked.

(c) Under the Companies Act, 2013 the company must issue share certificates within two months from the date of allotment (in a public issue the shares are credited to the allottees’ demat accounts).