When shares are oversubscribed, the promoter nay decide to scale down the number of shareholding when this is done, the shares are being

Answer Details

When shares are oversubscribed, it means that the number of people who want to buy the shares is greater than the number of shares available for sale. In such a situation, the company may decide to scale down the number of shares allotted to each investor. If the company decides to scale down the number of shares allotted to each investor, it can do so in different ways. One way is to issue shares on a prorata basis, which means that each investor will receive a proportionate number of shares based on the number of shares they applied for and the total number of shares available for sale. For example, if an investor applied for 100 shares and the total number of shares available for sale is 1,000, and the company decides to issue shares on a prorata basis, the investor will receive 10% of the shares, which is 10 shares. Issuing shares on a prorata basis ensures that all investors receive a fair allocation of shares based on their application, and it is a common practice used by companies when shares are oversubscribed. Therefore, the correct answer to this question is "issued on a prorata basis."