What is a potential consequence of improper share allotment?

Improper share allotment can indeed lead to enhanced regulatory scrutiny. When shares are allotted incorrectly—whether through violating regulations, improperly diluting the value of existing shares, or not adhering to pre-established procedures—regulatory bodies may take notice. This can prompt investigations or audits to ensure that the company is operating within the legal framework governing securities and corporate governance.

In addition, regulatory authorities are focused on maintaining market integrity and the protection of shareholders' interests. Irregularities in the issuance of shares could lead to allegations of unfair practices or insider trading, resulting in increased oversight from these bodies. The company may face fines, sanctions, or other penalties as regulators respond to the improper actions. Therefore, enhanced regulatory scrutiny is a plausible outcome in situations where share allotment procedures are not followed correctly.

The other choices might reflect broader business concepts but do not directly connect to the implications of improper share allotment. They are less likely to be consequences of the action in question. For instance, strengthening shareholders' rights or improving corporate governance practices typically arise from proper, transparent actions and regulations rather than from errors in share allotment. Similarly, a reduction in market competition is not a direct result of mishandling share distribution; rather, it may stem from different factors within