Effect of Irregular Share Allotment: When allotment of shares is irregular, applicant can get the allotment cancelled at his option and can Jet the refund of the amount paid on shares. It is important to note that in case of irregular allotment, the applicant can get the allotment cancelled if any loss has been incurred by him due to this allotment. The time limit for the same is as under:
(1) Application for cancellation of share allotment can be made within two months of the first, statutory meeting.
(2) Within two months of allotment of shares, if allotment was done after the first statutory meeting.
(3) A director is personally responsible to compensate the loss to the company or share holder if he willfully violates provisions of statutory allotment or allows others to violate them. The process of recovery of such a loss must be initiated within two years of allotment of shares.