Introduction
Subscribed refers to the number of securities applied for in an application made by a person in a public issue by a corporate. In general, companies make an offer to the public for subscription to its shares or debentures or other securities. Individuals applying for the offer expect to own a certain number of shares once the public offer is completed.
In case of an offer for subscription for shares made in an initial public offering, the allotment price is determined on the first day of trading. In the case of debt securities, the allotment price or issue price is known at the time of subscribing to the issue.
In a case where the public offering is managed by an investment bank, the investment bank is responsible for ensuring that the issue garners the required amount of subscription. Likewise, many high net worth individuals can subscribe to a public offering through their brokers. The investment bank also determines the price at which the shares offered would be listed.
Understanding Subscribed
In the case of an initial public offering, the shares are offered to the public in a price band.
The number of shares allotted would stand credited to the demat account of the investor.
A person may apply or subscribe for N number of securities but maybe allotted a lesser number in case of an oversubscription of the issue. An issue is said to be oversubscribed when the number of shares subscription received is greater than the number of shares offered in the public offering.
Persons wishing to subscribe to a public issue would have a prospectus to the issue giving information about the company.
A corporate making a public offering would not want too many subscriptions for its offering since it may lower the issue price. Also, the corporate may not want too few a subscriptions as it would be unable to sell its entire offering or the offering may remain unsubscribed, leading to losses.
