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Allotment

amount, company, shares, share, fixed and named

ALLOTMENT. An applicant for shares which are being issued by a company gener ally fills up a printed form of application supplied by the company, in which he re quests that the shares he requires may be allotted to him. At the same time he either sends a cheque to the company for the deposit which is payable on application, or pays in the amount to the company's bankers. If his application is successful he will, in due course, receive a letter of allot ment stating the number of shares which have been allotted to him, and requesting payment of the amount due per share upon allotment.

With regard to the allotment of share capital of a company, the Companies (Con solidation) Act, 1908. Section 85. provides as follows : " (1) No allotment shall be made of any share capital of a company offered to the public for subscription, unless the following conditions have been complied with, namely :— (a) the amount (if any) fixed by the memorandum or articles and named in the prospectus as the minimum sub scription upon which the directors may proceed to allotment ; or (1)) if no amount is so fixed and named, then the whole amount of the share capital so offered for subscription, has been subscribed, and the sum payable on application for the amount so fixed and named, or for the whole amount offered for subscription, has been paid to and received by the company.

" (2) The amount so fixed and named and the whole amount aforesaid shall be reckoned exclusively of any amount payable otherwise than in cash, and is in this Act referred to as the minimum subscription.

" (3) The amount payable on application on each share shall not be less than five per cent. of the nominal amount of the share.

" (4) If the conditions aforesaid have not been complied with on the expira- ' tion of forty days after the first issue of the prospectus, all money re ceived from applicants for shares shall be forthwith repaid to them without interest, and, if any such money is not so repaid within forty eight days after the issue of the prospectus, the directors of the com pany shall be jointly and severally liable to repay that money with interest at the rate of five per cent= per annum from the expira tion of the forty-eighth day : Provided that a director shall not be liable if he proves that the loss of the money was not due to any misconduct or negligence on his part.

" (5) Any condition requiring or binding any applicant for shares to waive compliance with any requirement of this Section shall be void.

" (6) This Section, except sub-section (3) thereof, shall not apply to any allotment of shares subsequent to the first allotment of shares offered to the public for subscription.

" (7) In the case of the first allotment of share capital payable in cash of a company which does not issue any invitation to the public to subscribe for its shares, no allotment shall be made unless the minimum subscrip tion (that is to say) : (a) the amount (if any) fixed by the memorandum or articles • and named in the statement in lieu of prospectus as the minimum subscription upon which the directors may proceed to allotment ; or (b) if no amount is so fixed and named, then the whole amount of the share capital other than that issued or agreed to be issued as fully or partly paid up otherwise than in cash, has been subscribed and an amount not less than five per cent. of the nominal amount of each share pay able in cash has been paid to and received by the company.

This subsection shall not apply to a private company or to a com pany which has allotted any shares or debentures before the first day of July nineteen hundred and eight." \Vhen a company limited by shares makes any allotment, the company must, within one month thereafter, file with the registrar of companies a return of the allotments in accordance with Section SS of the Act. (See COMPANIES, LETTER OF ALLOTMENT.)