The Compames Act however, wilfully authorises or permits , contravention of the legal

The Compames Act however does not explicitly provide for the time of closing the subscription list Ordinanly, the company may keep the subscription list open for any length of time it wants. However, where the prospectus states Ulat an application has been made for the listing of Ule sharesdebentures in a recognized stock exchange, the subscription list must be kept open for at least three days under the rules of the stock exchanges. In such cases the prospectus usually mentions the time of closing of the subscription list Under Sec. 73, if the permission for hsting is riot granted by the stock exchange wltlun 10 weeks from the date of the closing of the subscription list, the allotment becomes void
Irregular AUotment. Any allotment which is made in contravention of the above rules is voidable at Ule instance of Ule applicant. The allotment in that case is knob n as 'Irregular Allotment'. The applicant of shares so allotted must give notice of this intention to set aside Ule allotment wiUun a period of two months after the holding of the statutory meeting, or wiUfm two months after the date of allotment when no statutory meeting is to be held or the allotment is made after the holding of Me statutory meeting [Sec. 71(1)1.
Any director, who knowingly contravenes, or wilfully authorises or permits the contravention of the legal provisions m connection with the allotment of sliares, may be liable to compensate the company and the allottee for any: loss, damages or costs which they may have sustained or incurred thereby, provided that legal proceedings for recovery of such damages or loss or costs shall not be started after the expily of two years from the date of the allotment. :[Sec. 71(31."
PROCEDURE OF ALLOTMENT
After the applications for shares have been checked, sorted and entered in the Share Applicatmn and AUotment List and the statutory conditions for ado ment have been satisfied, the directors can proceed wiUi the work of allotment. If the igsue has been just fully subscribed or it IS just short of full subscription, there is no dift-lculty in allotting the shares. The directors cam allot m each applicant the actual number of shares applied for But if the rogue is oversubscribed Ule applicants will have to be allotted less number of Mares than applied for. hn Uat case, allotment may be made: (i) by lottery, in by drin lots for the purpose of aUotment or (ii j on pro rata basis, br Biker shares to each applicant in the the nmlber of 5 pied tier In snob cam the 1 Exalt appends a small
INCORPORAllON OF A COMPANY 137
committee of directors to consider and report on the basis of attot lnent to be adopted in the case of listed securihes, the allotment procedure may have to be decided upon with the consent of the stock exchange authorities The procedure is finalised by the Board in the tight of all relevant factors
Shares are then allotted to each applic mt on the basis approved by the Board amd the number so allotted is noted against the nanny of each applicant in the Share Application and AUohnent List. The Chairman of the Board initials even sheet of the 'ist and puts his signature at the end of the bst