A company has just received applications for shares in response to a public issue, which has been fully subscribed. How would you ensure that the shares are validly allotted ?

"Allotment" of shares means the act of appropriation by the Board of directors of the company out of the previously un-appropriated capital of a company of a certain number of shares to persons who have made applications for shares (In Re Calcutta Stock Exchange Association, AIR 1957 Cal. 438). It is on allotment that shares come into existence. The following general principles should be observed with regard to allotment of securities: The allotment should be made by proper authority i.e. the Board of directors or committee authorities to allot securities on behalf of the Board. Allotment of securities must be made within a reasonable time as specified in section 56 of the Companies Act, 2013. The allotment must be communicated. This is done by sending a letter of allotment to the applicant. Allotment can be only against an application. Section 2(55) of the Act requires that a person should agree in writing to become a member. Allotment should not be in contravention of any law e.g. if securities (not fully paid up) are allotted to a minor, the allotment could be void. The allotment should be absolute and unconditional. Securities must be allotted on same terms on which they were applied for and as they are stated in the application for securities. Allotment of securities subject to certain conditions is also not valid. Similarly, if the number of securities allotted is less than those applied for, it cannot be termed as absolute allotment.