Regret and Refund on Non-Allotment of Debentures

When a Regret Letter Is Needed

A Letter of Regret is sent wherever an applicant's application for debentures cannot be met, in whole or in part — most commonly because the issue is oversubscribed and the Board's pro-rata allotment leaves some applicants with fewer debentures than applied for, or none at all, and occasionally because an application itself is found invalid or incomplete (for example, an application unaccompanied by the full application money, or made in a manner the terms of the issue do not permit). Whatever the reason, the applicant is owed both a courteous, honest explanation and the prompt refund of any application money paid for debentures not allotted — a company may not simply retain money for debentures it has not, in fact, allotted.

What a Letter of Regret States

1. A courteous acknowledgement of the application, thanking the applicant for their interest.
2. An honest statement of the outcome — no debentures allotted, or only a part of the number applied for — and, briefly and factually, the reason, typically oversubscription.
3. The exact amount being refunded, and the mode of refund — cheque, demand draft, or direct credit to the applicant's bank account.
4. Where a part allotment has been made, this letter is often combined with, or sent alongside, the Letter of Allotment for the debentures actually allotted, refunding only the excess application money paid on the portion not allotted.
5. An assurance that the refund is being made promptly, as required under the terms of the issue.

Specimen Letter — Regret and Refund on Non-Allotment

VIDARBHA COTTON MILLS LIMITED

Registered Office: Wardha Road, Nagpur – 440025

CIN: U17111MH2009PLC167891

Date: 22nd May

Mrs. Kavita Bhosale

Dear Madam,

Sub: Non-Allotment of Debentures Applied For — Refund of Application Money

We thank you for your application for 150, 8.5% Secured Redeemable Non-Convertible Debentures of ₹100 each of our Company.

We regret to inform you that, owing to the issue having been oversubscribed several times over, our Board of Directors was unable to allot any debentures against your application. We are accordingly refunding, in full, the application money of ₹15,000 paid by you, by way of the enclosed Cheque No. 771234 drawn on Bank of Maharashtra, Nagpur Main Branch, payable at Nagpur.

We regret our inability to allot debentures to you on this occasion, and thank you once again for your interest in our Company.

Thanking you,

Yours faithfully,

For Vidarbha Cotton Mills Limited

(Suresh Tandale)

Company Secretary

Encl: Cheque No. 771234 for ₹15,000 …