Question:
When shares are allotted on pro-rata basis, excess application money is generally adjusted towards:
When shares are allotted on pro-rata basis, excess application money is generally adjusted towards:
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Unless the Articles of Association or the prospectus state otherwise, excess application money cannot be used for calls (Final Call) without the applicant's consent; it is primarily for Allotment.
Updated On: May 19, 2026
- Final Call
- Share Capital
- Allotment Money
- Dividend
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The Correct Option is C
Solution and Explanation
Step 1: Understanding the Question:
In pro-rata allotment, an applicant receives fewer shares than they applied for. The extra money they sent with the application is kept by the company to pay for future installments.
Step 2: Detailed Explanation:
Under pro-rata allotment, the surplus application money (after covering the application stage requirement for allotted shares) is usually carried forward to pay for the "Allotment" stage. If there is still a surplus after allotment, it may be adjusted towards calls or refunded, depending on the terms of the issue. However, the first and most general adjustment is towards Allotment.
Step 3: Final Answer:
Excess application money is generally adjusted towards Allotment Money.
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