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Irregular Allotment Of
Shares
• It means an appropriation of a certain number of
shares to an applicant in response to his application
for shares.
• Allotment means distribution of shares among those
who have submitted written application.
1 Where minimum subscription has
not been received.
2 Where a copy of the prospectus
has not been filed with the
Registrar.
3 Where a copy of the statement in
lieu of prospectus has not been
received to the Registrar at least
three days before the allotment.
5 Where a minimum of 5% of the
nominal value of shares has not
been received by way of
application money.
6 Where the application money has
not been kept in a scheduled
bank.
Where stock exchange has either
7 not listed shares within 10 weeks
or has refused permission.

4 Where subscription list is opened

th
before the beginning of the 5 day
from the date of issue of
prospectus.
• Where an allotment is made before receiving the
minimum subscription or before receiving the
application money subject to a minimum of 5% of
the nominal value of the share.
• Without having filed a prospectus or a statement in
lieu of prospectus with the registrar of Companies.
• Without keeping all the money in schedule bank.
• If the copy of the prospectus is not delivered to
registrar office.
• If the allotment is made before the beginning of 5th
date of prospectus.

CONSEQUENCE
The allotment shall be valid but the company and its
officers in default, shall be liable to a fine.
• Where the allotment is defective
because no application was made to
the stock exchange for listing of
shares.
• If stock exchange refuses within 10
weeks.
S.
Effect of Liability of Company/Directors,
No Nature of Irregularity
Allotment etc.
.

Company and every person

Copy of a knowingly a party to the issue
prospectus not Allotmen of such a prospectus shall be
1. punishable with fine which may
delivered to the t is valid.
extend to Rs. 50,000
Registrar (Sec. 60)
[Sec.60(c)].

(a)Director wilfully authorising the

Application money Allotmen contravention, shall be liable for
being less than 5% t is damages to the company as well as
to the allottee [Sec.71(3)].
2. of the nominal voidable (b)Company and every officer of the
value of share (Sec. company shall be punishable with
(Sec. 69(3)]. 71(1)]. fine which may extend to Rs. 5,000
[Sec. 629A (residue clause)].
S.
Nature of Effect of
No Liability of Company/Directors, etc.
Irregularity Allotment
.
Minimum (a)The entire application money be returned
Allotme forthwith. In case such money is not repaid
subscription within 10 days, then the directors shall be
nt is
not liable to repay with interest @ 6% p.a.
3. voidable (b)Directors wilfully responsible for
subscribed
[Sec. contravention shall be liable for damages to
for[Sec.
71(1)]. the company as well as the allottee [Sec.
69(1)]. 71(3)].
Application (a)Every promoter, director or other
money not person who is knowingly responsible for
Allotme
kept such contravention shall be punishable
nt is with fine, which may extend to Rs.
deposited
4. voidable 50,000.
with a (b)Director wilfully guilty of
([Sec.
scheduled contravention shall be liable for
71(1)]. damages to the company as well as the
Bank [Sec.
allottee [Sec. 71(3)].
69(4)].
S.
Nature of Effect of
No Liability of Company/Directors, etc.
Irregularity Allotment
.
(a)Company and every director,
A statement in
responsible for contravention shall
lieu of Allotment
be punishable with fine up to Rs.
prospectus not is
10,000 [Sec.70(4)].
5. delivered to voidable
(b)Director who wilfully authorises
the ([Sec.
contravention shall be liable to
Registrar 71(1)].
damages to the company as well
(Sec.70)
as the allotee [Sec.71(3)].

Time limit as to
opening of the Allotment
Company and every officer who is
subscription is valid
6. in default shall be liable to fine up
list not ([Sec.
to Rs. 50,000 [Sec.72(3)].
observed 72(3)].
(Sec.-72)
S.
Nature of Effect of
No Liability of Company/Directors, etc.
Irregularity Allotment
.

If permission is refused or is not

Condition as to granted within a period of 10
listing of weeks from the date of closing of
Allotmen
shares on a the subscription list, the entire
t is void
7. recognised money received on application
([Sec.
stock exchange shall become due for repayment
72(3)].
not observed and if not paid within 8days,
[Sect.73(1)] directors must repay with interest
@ 15% p.a. (Sec. 73).
•

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