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Meaning of pro rata allotment in issue of shares and how it works
Accountancy
First time asking questions here, so please ignore any mistakes. Can someone please explain how pro rata allotment works for company and aslo the individual who has applied for excessive shares?
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Best Answer
Pro rata allotment is used when there is oversubscription of shares. Eg. If company issues 100,000 shares and 200,000 shares are subscribed by the public it is known as oversubscription. The company may apply pro rata allotment in the ratio of 2:1 ie. For every 2 shares, 1 share is issued to the person. So basically person who has applied for 10 shares, he will receive 5 shares. I hope this helps
