Define: Allotment

Allotment refers to the process of allocating shares or securities to individuals or entities. It is a common practice in corporate law and securities regulations. During an allotment, a company issues new shares or securities to investors or existing shareholders. This can be done through various methods, such as a public offering, private placement, or rights issue.

The purpose of an allotment is to raise capital for the company or to reward existing shareholders. The allotment process typically involves determining the number of shares or securities to be issued, setting the price or terms of the offering, and complying with legal requirements, such as obtaining necessary approvals from regulatory authorities.

Companies must adhere to applicable laws and regulations governing allotments, including securities laws, company law, and stock exchange rules. These regulations aim to ensure fairness, transparency, and investor protection. They may require companies to disclose relevant information to potential investors, maintain proper records, and comply with specific procedures for allotments.

Allotments can have legal implications for both the company and the investors. For the company, it may affect its capital structure, ownership, and governance. For investors, it represents an opportunity to acquire ownership in the company and potentially earn returns on their investment.

In summary, allotment is a legal process through which companies issue new shares or securities to investors or existing shareholders. It is subject to various legal requirements and regulations to ensure fairness and investor protection.

This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.

This glossary post was last updated: 29th March 2024.