Allotment of shares is the process of issuing new shares to shareholders. This can be done for a number of reasons, such as to raise capital, to expand the company's ownership base, or to reward existing shareholders.

When a company allots new shares, it must first determine the number of shares to be issued. This number is typically based on the company's needs for capital or expansion. Once the number of shares has been determined, the company must then issue a prospectus to potential investors. The prospectus provides information about the company, its business, and its financial performance.

Potential investors who are interested in purchasing new shares must submit an application to the company. The application will typically include information about the investor's name, address, and investment amount.

After the application period has closed, the company will review the applications and determine which investors will be allocated shares. The allocation of shares is typically based on a number of factors, such as the size of the investment and the investor's risk tolerance.

Once the allocation of shares has been determined, the company will notify the investors of their allotment. The investors will then be required to pay for the shares. Once the shares have been paid for, the company will issue the investors with share certificates.

The allotment of shares is an important process for any company that is looking to raise capital or expand its ownership base. By following the steps outlined above, companies can ensure that the allotment process is fair and transparent.

Here are some of the key reasons why a company might allot new shares:

* **To raise capital:** When a company needs to raise money, it can do so by issuing new shares. This is a common way for companies to finance their growth.
* **To expand the ownership base:** When a company issues new shares, it is essentially selling a piece of itself to the public. This can be a way for the company to increase its shareholder base and attract new investors.
* **To reward existing shareholders:** When a company issues new shares, it is typically done at a premium to the current share price. This is a way for the company to reward its existing shareholders for their investment.

Here are some of the key steps involved in the allotment of shares:

1. The company determines the number of shares to be issued.
2. The company issues a prospectus to potential investors.
3. Potential investors submit applications to purchase shares.
4. The company reviews the applications and determines which investors will be allocated shares.
5. The company notifies the investors of their allotment.
6. The investors pay for the shares.
7. The company issues the investors with share certificates.

The allotment of shares is a complex process, but it is an important one for any company that is looking to raise capital or expand its ownership base. By following the steps outlined above, companies can ensure that the allotment process is fair and transparent.

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