Question

When applications for more shares of a company are received than the number of shares offered to the public for subscription, it is known as:

• A. Over subscription
• B. Full subscription
• C. Subscription at premium
• D. Under subscription

Hint:

When total applications exceed the number of shares issued, it is called over-subscription — often leading to pro-rata allotment.

Answer 1

The Correct Option is A

Over-subscription occurs when a company receives more applications for shares than the number of shares it had offered to the public.
For example, if a company offers 1,00,000 shares for public subscription but receives applications for 1,50,000 shares, it is a case of over-subscription.
This usually reflects strong public interest and trust in the company.
In such cases, companies may:
- Allot shares on a pro-rata basis
- Reject excess applications
- Refund application money or adjust it in other allotments

Let’s review the incorrect options:
(B) Full subscription means exactly as many shares are applied for as are offered — no excess.
(C) Subscription at premium relates to issue price being higher than face value — not about excess demand.
(D) Under subscription is when fewer applications are received than offered.
Hence, the correct term is Over subscription.