ALLOTMENT OF SHARES
In response to an issue of a prospectus there shall come application for shares from the prospective investors. Allotment is the acceptance of the offer. Once an offer is accepted it results in a contract binding the Company to the member and the applicant becomes a shareholder. The provisions regarding allotment are either general or statutory:
A valid allotment must be made in accordance with general rules of the law of contract relating to offer and acceptance. The rules include:
In National Savings Bank Association Case
H applied for shares in the Company. The shares were allotted to him but the letter of allotment was sent to the Company’s agent for delivery; by hand to H. After the allotment but before the letter of allotment was delivered to him H withdrew his application. It was held that H was not a shareholder in the Company because he withdrew his offer before acceptance(allotment) was made hence there was no binding contract between him and the company.