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Undersubscription and oversubscription indicate the number of times an issue has been subscribed. The main differences between oversubscription and under-subscription are explained below for a better understanding of the terms.
Over Subscription | Under Subscription | |
---|---|---|
Meaning |
The total number of bids received is more than the number of shares offered |
The total quantity of bids received is less than the number of shares offered. |
Demand |
The demand for shares is greater than the shares offered. |
The demand for shares is less than the shares offered. |
Allotment |
There is no guaranteed allotment in case of oversubscription. |
Investors receive guaranteed allotment in case of undersubscription. |
Minimum Subscription |
Minimum subscription levels are already met in an oversubscribed issue |
If the minimum subscription of 90% is not received, the issuer is obliged to refund the entire application money to investors. |
Company Performance |
This indicates good prospects as there is a higher demand for the shares. |
Indicates average performance or weak prospects considering lower demand for shares. |
Topic: IPO Subscription Feedback
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