What is Under Subscription and Over Subscription

What is under subscription and what is over subscription?

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Under Subscription 

Under subscription is a situation where number of shares is applied by the public is less than the share issued by the company.

For example

Issued 1 lakh share but received 80000 share. It is known as under subscription.

The company may face the problem of minimum subscription. Number of shares applied is less than offered by subscription. 

No pro data allotment in case of Under subscription. All the application are accept and the no access money is refunded.

Over subscription

Over subscription is a situation where a company received more applications from shares buyer then the number of share made available for public.

For examples

1,00,000 share issued but application money received 1,70,000 this is known as over subscription.

The company does not face such a problem of minimum subscription. Number of shares applied by the public is more than offered by subscription.

Pro rata allotment is made in case of over subscription. Access money is refunded in case of over subscription.

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