Share allotment is the creation and issuing of new shares, by a company. New shares can be issued to either new or existing shareholders. Share allotment can have implications for any existing shareholders share proportion. Typically, new shares are allotted to bring on new business partners.

Procedure for Allotment of Shares in IPO With this, you now have the final number of successful bids for the said IPO. If the total number of bids made by the applicants is less than or equal to the number of shares being offered, then complete allotment of stocks will take place.

The key difference between allotment and issue of shares is that an allotment is a method of share distribution in a company whereas share issue is the offering of the ownership of the shares to shareholders to hold, and later transfer to another investor.

• MODE OF ALLOTMENT OF SHARES: A public company may allot shares in the following ways:
• PUBLIC OFFER: An application is made to stock exchange(s) for the shares to be dealt through it/ them, before any offer of allotment to public.
• PRIVATE PLACEMENT/ PREFERTIAL ALLOTMENT:
• RIGHTS ISSUE:
• BONUS ISSUE:

When the company decides to allot the shares at pro-rata basis, then it has to allot 10000 shares to the applicants of 20000 shares. Thus, the ratio will be 20000:10000 i.e. 2:1. Hence, an applicant for 2 shares will receive 1 share.

These are called maximum RII allottees and is calculated by dividing the total number of equity share available for the allotment to RII by the minimum bid lot. Then, the maximum retail investors will receive the minimum bid lot = 10 lakhs/50 = 20,000. This means that 20,000 participants will receive at least 1 lot.

It means that all the applicants have been allotted or refused allotment on proportionate basis. For example: A company issued 60,000 shares, receives applications for 2, 40,000 shares and makes pro-rata allotment. This will mean that applicants have been allotted 25% of the shares applied.

How to get Confirm IPO Allotment?

1. Apply Single Lot.
2. Use Multiple Demat Accounts.
3. Choose Cut-off price during the IPO Application.
4. You Should Avoid Last Moment Rush.
5. Avoiding Technical Rejections.
6. Buy Parent Company Shares.

IPO allotment doesn’t happen on the basis of who applied first or the first come, first serve basis. … If the IPO has not received good response from the investors and it is under subscribed then you may get allotted as many lots you have applied for.

There can be 2 reasons for non-allotment of shares in an IPO. These 2 reasons have been mentioned below i.e. Your bid was not considered as valid i.e. invalid PAN No. or invalid demat account number or multiple applications submitted from the same name.

After the closing of an IPO, the finalization of allotment happens by the third working day, also called the basis of allotment date. On the fourth working day, you get intimation of refunds, and on the fifth working day, your shares get credited to your Demat account.

IPO Basis of Allotment is a document published by the registrar of an IPO after finalizing the share allocation based on regulatory guidelines. This document provides information about the demand of the IPO stock. The IPO allotment information is categorized by the number of shares applied by investors.

Can you sell Pre-IPO shares immediately? No, the Pre-IPO shares have a lock-in period of one year. It means you can’t sell stocks before one year from the date of listing.

The Benefits of Buying IPO Stock A block of common stock bought during an initial public offering has the potential to deliver huge capital gains decades down the line. Even just the annual dividend income of a highly successful company can exceed the original investment amount, given a few decades’ time.

Investors should wait at least six months after an IPO to buy in given the huge amount of risk for losses. That’s one of the most important things you have to understand about the IPO process.

Top 10 Largest Global IPOs of All Time

• Alibaba Group Holding Limited.
• Agricultural Bank of China.
• ICBC.
• General Motors Company.
• NTT DOCOMO, Inc.
• Visa Inc.
• AIA Group Limited.
• Enel.

While many companies choose to do an initial public offering (IPO), in which new shares are created, underwritten, and sold to the public, some companies choose a direct listing, in which no new shares are created and only existing, outstanding shares are sold with no underwriters involved.

IPO allows companies to raise capital by selling shares. Moreover, companies don’t have to repay the capital raised through the issuance of IPO. Companies can offer stock as an incentive, bonus, or as part of an employment contract.

Issuers that want to test the market or conduct an offering without attracting publicity find that a registered direct offering is a good choice. … This permits an issuer to “test” the market for a potential offering, without a public announcement that might affect the issuer’s stock price.

Share allotment in an IPO

1. Appointment of underwriter or investment banker.
2. IPO registration via the DRHP.
3. Verification by SEBI.
4. Making an application to the Stock exchange.
5. Advertising of the IPO, FPO, Rights issue.
6. IPO pricing.
7. Allotment of shares.