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Simple English definitions for legal terms
allotment certificate
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A quick definition of allotment certificate:
Term: ALLOTMENT CERTIFICATE
Definition: An allotment certificate is a document that shows how many shares of a company someone has agreed to buy, how much they will pay for them, and when they will make the payment. It is like a receipt for buying shares.
A more thorough explanation:
Definition: An allotment certificate is a document that records the important details of a subscription of shares. It includes information such as the number of shares to be purchased, the price to be paid, and the payment and delivery schedule.
Example: When a company decides to issue new shares, it may offer them to the public for purchase. Investors who want to buy these shares will fill out a subscription form and send it to the company along with the payment. Once the company receives the subscription form and payment, it will issue an allotment certificate to the investor. This certificate confirms that the investor has been allotted a certain number of shares at a specific price.
Another example: Let's say a company is issuing 1,000 new shares at $10 per share. An investor decides to buy 100 shares and sends a payment of $1,000 along with the subscription form. The company will then issue an allotment certificate to the investor, stating that they have been allotted 100 shares at $10 per share, and that the payment has been received.
The examples illustrate how an allotment certificate is used to confirm the purchase of shares and record important details of the transaction.