What is under subscription of shares?

An under-subscription of shares occurs when an IPO receives fewer applications than shares offered.

For example, if a company offers 50,000 shares and receives applications only for 40,000 shares, it is under subscription.

In the case of under subscription, all investors receive the allotment. However, if the issue does not reach the minimum subscription rate of 90%, the issue is cancelled and the issuer refunds all money to the investors.

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