The disclosure document sets-out the amount the company wishes to raise. In some instances the disclosure document will permit what’s called oversubscription, meaning, in short, and subject to the offer rules regarding this issue as set-out in the disclosure document, the effect of oversubscription is dilution. That is, in percentage terms, you will end up with a smaller percentage than you might have thought. It is best illustrated by example:
A company seeks to raise $500,000.00 via a share issue. You invested $5,000.00 to obtain 1% of the offer ($500.00/$5,000.00 equates to 1%) The offer closes with a total subscription amount of $600,000.00, therefore your $5,000.00 now equates to 0.83%, ($5,000.00/$600,000.00).
There other methods of dealing with oversubscription, the offer rules including the rules surrounding oversubscription will be set-out in the disclosure document.
There are many good reasons for a company to accept oversubscription including cost and time efficiencies.