A Letter of Allotment is an official document issued by a company to investors confirming the allocation of shares after an Initial Public Offering (IPO) or rights issue. It serves as proof that the applicant has been granted a specific number of shares based on their application and the companyís allotment process. This document is a crucial step before the issuance of the final share certificate or the credit of shares to the investorís demat account.

In the context of an IPO, the Letter of Allotment is typically sent to successful applicants after the company finalizes its allotment on the basis of demand and availability of shares. Investors can check their allotment status on the registrarís website using their PAN, application number, or DP ID. Once the shares are allotted, the Letter of Allotment acts as temporary ownership evidence until the company completes the listing process.

For investors, understanding the significance of this document is important. It confirms participation in the companyís capital structure and indicates that the investorís funds have been successfully utilized to purchase equity. The Letter of Allotment also contains key details such as the applicantís name, number of shares allotted, face value, issue price, and distinctive share numbers.

From a regulatory perspective, the Securities and Exchange Board of India (SEBI) ensures transparency and fairness in the allotment process. Companies and registrars must adhere to strict timelines and procedures for issuing allotment letters. Once shares are credited to the demat account, the Letter of Allotment becomes redundant but remains an important record for legal and historical reference.

In summary, a Letter of Allotment plays a vital role in the share issuance process by confirming ownership, ensuring transparency, and establishing investor trust in capital market operations.