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Home Accounting Dictionary Letter A Allotment of Shares Definition

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Allotment of Shares Definition:

When a company receives an application for shares issued by means of prospectus, it proceeds to allot shares on predetermined basis (which is set out in the prospectus).  Where applications exceed the shares available, allotment is made proportionally, though often applications for shares up to a stated number are accepted in full. The allotment of shares is made by means of a letter of allotment. This entitles the recipient to a certificate for the number of shares stated in the letter. His title may however depend on his paying the sum previously stated as due on allotment.

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