Question

Consider the following steps in the process of allotment of shares.
1. Issue of prospectus
2. Appointment of manager to the issue
3. Receipt of application money
4. Listing in a stock exchange
5. Minimum subscription
The correct chronological sequence of these steps is :

• A. 1, 2, 5, 4, 3
• B. 2, 1, 3, 5, 4
• C. 2, 1, 5, 3, 4
• D. 1, 2, 4, 5, 3

Answer 1

The correct option is B 2, 1, 3, 5, 4

Share are allotted to shareholders after a series of few steps:

2. The first step is to appoint a manager for the purpose of issue of shares. The manager holds the responsibility to carry out the process and maintain a fluency within the firm.

1. Then comes the issue of a prospectus which denotes the information about securities issued and various other legal information about the company like its investors' information along with its way to cycle the money in business.

3. After it, the application money is received by the company from the public. Generally, the money received on the application is much more than the money considered by the company.

5. Then the minimum subscription is disclosed which tells the minimum shares to be applied by the public. As per SEBI guidelines, a minimum of 90% of issued shares must be subscribed by the public.

4. At last, the allotted securities are listed under a stock exchange. The company's name is registered in the stock market along with the price of securities issued by them.

Hence, the chronological order to be maintained while issuing shares is $2,1,3,5,4$.