Allotment

When a company makes an issue of new shares , the shares will be allotted to those people applying for them on the terms outlined in the fund-raising prospectus .

When demand for shares outstrips supply, that is, if the new issue is oversubscribed - which was a regular occurrence in privatisation issues and was taken as a sign of the success of the sale - a reduced allocation will be made.

This reduced allotment may be based on the number of shares applied for, or perhaps even on the basis of a random ballot of those people who applied.

See Also: Online share dealing service Stockmarket Centre

Last Updated: March 2007 © Moneyextra.com

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