Guru Ltd. invited applications for issuing 5,00,000 equity shares of Rs. 10 each at a premium of Rs. 5 per share. Because of favourable market conditions the issue was over-subscribed and applications for 15,00,000 shares were received. Suggest the alternatives available to the Board of Directors for the allotment of shares.

Explanation

It is a case of Over-subscription. Three alternatives for alloting these shares may be :
(i) Some applications may be rejected in full, because of some technical defect, i.e., insufficient application money. Pro-rata allotment may be made to the remaining applicants.
(ii) Some applications may be rejected in full and remaining applications may be accepted in full.
(iii) Some applications may be rejected in full, some may be accepted in full and pro-rata allotment may be made to the remaining applicants.