Allotment of shares

The allotment of shares refers to the creation and distribution of new shares by a company, which can be offered to both existing and new shareholders. The process begins with applicants submitting forms for shares. Upon approval, this application becomes an “allotment,” which is essentially the formal allocation of shares by the company’s directors to a specific individual. It’s important to distinguish this from the re-issuance of forfeited shares. For a valid allotment, the process must adhere to the provisions of the Companies Act, 2013, and the principles of contract law concerning the acceptance of offers. The allotment of shares refers to the process where a company formally creates and distributes new shares to applicants, thereby accepting their offer to subscribe to these shares. This act signifies the formation of a binding contract between the company and the shareholder. It’s crucial for a valid allotment to adhere to the provisions of the Companies Act, 2013, and the general principles of contract law concerning offer and acceptance. It is distinct from the re-issue of forfeited shares, which involves selling existing shares that were previously taken back by the company due to a shareholder’s failure to pay dues.