Explain the procedure for allotment of shares.

Answer: Allotment is the acceptance by the company of the offer (application) made by the applicant to purchase its shares. The procedure is:

1. Receipt of minimum subscription: The company can allot shares only after receiving the minimum subscription (90% of the issue size in a public issue) within the prescribed period; otherwise the money must be refunded.
2. Listing permission: An application for listing is made to the stock exchange(s) and in-principle approval is obtained before allotment.
3. Basis of allotment: If the issue is oversubscribed, the basis of allotment is decided in consultation with the designated stock exchange, on a proportionate basis.
4. Board resolution: The Board of Directors (or allotment committee) passes a resolution for allotment of shares.
5. Credit to demat account / letter of allotment: Shares are credited to the demat accounts of successful applicants and allotment advice is sent to them.
6. Letter of regret and refund: Applicants who are not allotted shares are sent a letter of regret, and their application money is refunded or the blocked amount (ASBA/UPI) is released within the prescribed time; interest is payable on delayed refunds.
7. Return of allotment: The company files a return of allotment in Form PAS-3 with the Registrar of Companies within 30 days of allotment.
8. Entry in Register of Members: Names of allottees are entered in the Register of Members (for demat shares, the register of beneficial owners maintained by the depository).
9. Issue of share certificates: Share certificates are issued within two months of allotment where shares are in physical form.
10. Trading: After final listing and trading approval, the shares are traded on the stock exchange.