OMTEX CLASSES: Conditions of valid allotment.

Conditions of valid allotment.

Ans. Company needs to follow certain conditions while allotting the shares which can be classified as

(1) Statutory
(2) General.

Over and above the conditions stated by the Act, company should observe the following conditions.

(1) Proper Authority: Only & only Board of Directors or Allotment Committee formed for the purpose is authorized to carry it on.

(2) Allotment against application: Shares can be allotted only if there was an application for it.

(3) Allotment not in contravention of any law: Allotment be in purview of not only the companies Act but also other relevant act and should not be violating any law in any way like Contract Act, Sales of Goods Act, FEMA, etc.

(4) Reasonable time: Allotment should happen within given period of time or else the applicant can reject it.

(5) Communication: Allotment or otherwise be communicated to the applicant in writing.

(6) Absolute and unconditional: It must adhere to terms stated in prospectus and application and not be conditional by any ways.