Q.
- Money obtained by issue of shares is known as:
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🔒 Start your 14-day free trial to unlock the full solution →Concept understanding — Company Allotment Return
Company Allotment Return — The First Meeting
Imagine you start a small business. You need money, so you ask friends to invest. Each friend gives you ₹10,000, and you promise them a share of the company. You write their names in a notebook, note how many shares each got, and that's your record.
Now scale that up to a real company with hundreds of investors. The company can't just scribble names in a diary — the law demands a formal, official record of who owns what. That official record, filed with the government, is the Company Allotment Return.
The Intuition: Why does the government care?
A company is a separate legal person. When it issues shares, it is essentially creating new owners. The government (through the Registrar of Companies, or RoC) needs to know:
- Who are the people now owning the company?
- How many shares were issued?
- Was the money actually received?
Without this, a company could issue fake shares, cheat investors, or hide ownership. The Allotment Return is the company's formal declaration: "Here is exactly what we did, and here is the proof."
The Precise Statement
Company Allotment Return is a statutory document (Form PAS-3 under the Companies Act, 2013) that a company must file with the Registrar of Companies within 30 days of allotting shares. It contains the details of the allotment — number of shares, names of allottees, consideration received, and the basis of allotment.
What goes into it?
The return is not just a list of names. It includes:
| What | Why it matters |
|---|---|
| Date of allotment | The exact day ownership changed hands |
| Number and class of shares | Equity? Preference? How many? |
| Names, addresses, and PAN of allottees | Who are the new owners? |
| Amount payable and amount paid | Was it fully paid up or partly paid? |
| Consideration | Cash, or something else (like a patent or land)? |
| Basis of allotment | Was it a rights issue, bonus issue, or fresh issue? |
A critical detail: Allotment vs. Application
Students often confuse these. Application is when an investor asks for shares. Allotment is when the company says "yes" and actually gives them. The Allotment Return is filed after allotment, not before.
A company cannot file the Allotment Return before the board meeting where allotment is formally approved. The return is evidence of a completed act, not a request for permission.
--- …
Money obtained by issue of shares is known as: …
Correct option: Share capital.
Money obtained by issue of shares is known as: money obtained by the issue of share …
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›Reveal solutionSolution
Share capital is a source of long-term finance.
Long-term finance is needed for a long period (usually more than five years) to buy fixed assets and for expansion. Share capital (equity and preference shares) is a permanent, long-term source of such finance. (Dividend and interest are returns paid on capital, not sou …
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›Reveal solutionSolution
Long-term finance is also called fixed capital.
Long-term finance is the money required for a long period (usually more than five years), which is invested in fixed/long-term assets such as land, building, plant and machinery. Because it is locked up in fixed assets, …
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›Reveal solutionSolution
True; equity shares carry the most risk.
Equity shareholders are the real owners who bear the ultimate risk of the business: they receive a dividend only if there is profit and only after preference shareholders and creditors are paid, and on winding up they are repaid last. Their return …
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A debenture holder is paid interest.
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›Reveal solutionSolution
NABARD was established in 1982.
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›Reveal solutionSolution
A company's capital is divided into shares.
The capital of a company is divided into a large number of small equal parts, each called a share, and a person holding shares is a shareholder/owner. (Dividend is the return paid on shares, and interes …
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