allotment letter

Definition

Document that details and confirms the amount or number of securities allotted to an applicant for a new issue or a rights issue. Presented usually as a certificate, it is renounceable up to a stated date. The allottee stockholder (shareholder) may renounce it in favor of another stockholder, or may sell his or her rights. If accepted by the allottee, it becomes the evidence of title to the stockholding. Also called letter of allotment, it may be traded on a stock exchange like the security it represents.