2. Allotment of shares
a) Allotment by proper authority
b) Allotment against application only
c) Within reasonable time
d) Must be communicated
e) Absolute and unconditional
3. Conditions
• When an offer is made to public
a) Company must issue a prospectus
b) Minimum subscription
c) Application money
d) Application money to be deposited in a scheduled bank
e) Allotment of shares to dealt in on stock exchange
4. Irregular allotment and its consequences
• a) An allotment is made without receiving minimum subscription
• b)Allotment – 5%
• c) Where an allotment is made without depositing the application
money in bank
• d) Private Co – Statement in lieu of prospectus
• e) Where company fails to apply for listing of its share
5. Consequences of an irregular allotment
a) Voidable at the option of allottee
b) Fine
c) Allotment is void
d) Director’s liability
6. Renunciation of allotment
• Allottee is permitted to give up the right over shares allotted to him
and transfer allotment made to him to some other person.
7. Forfeiture of shares
• Termination of membership of a shareholder by way of a penalty for
not paying the full amount
Rules related to forfeiture
1. Only for non – payment of debts
2. Proper notice
3. Formal resolution
4. For the benefit of the company
8. Effects of a valid forfeiture
• Ceases to be a member
• Former shareholder will still be liable as a past member
• Forfeited shares can be re-issued by the company