Also known as: pro-rata allocation · prorata allocation · pro rata allocations · pro rata · prorata
Written by attorneys · grounded in primary & secondary sources — see below
A method of apportioning assets, liabilities, or benefits among multiple parties in proportion to their respective ownership interests, claims, or entitlements.
Pulse Media decided to dissolve and distribute its remaining cash and equipment to shareholders. The board calculated each shareholder's ownership percentage and transferred assets accordingly. Phoebe Park received her portion based on her shares without any special adjustments for other classes.
Precision Tools' board approved a stock dividend of additional common shares. The company issued the new shares to existing holders in direct proportion to their current holdings. Parker Phillips received ten percent more shares matching his ownership stake.
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Philip Powell bought multiple appliances under a single installment contract with overlapping payment terms. When he defaulted, the seller applied each payment proportionally across all outstanding balances rather than to one item first. This allocation determined how much remained due on each appliance at the time of repossession.
A corporation distributes assets pro rata to the holders of one or more classes or series of its shares under Model Bus. Corp. Act § 12.01(d). This occurs during certain transactions such as sales of assets outside the ordinary course. The allocation follows ownership percentages without regard to other factors unless the articles provide otherwise.
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Shares may be issued pro rata and without consideration to the corporation's shareholders or to the shareholders of one or more classes or series of shares under Model Bus. Corp. Act § 6.23(a). The issuance constitutes a share dividend. The board may fix a record date to determine which shareholders participate.
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Some states apply pro rata allocation to divide liability equally among triggered policy years. Other states use variations that divide liability based on the percentage of policy limits relative to total triggered coverage. This approach contrasts with all-sums allocation that allows the policyholder to select specific years.
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Surplus proceeds stand in place of the foreclosed real estate. Junior liens attach to the surplus in order of their priority rather than through pro rata sharing. Only after all junior liens are satisfied does any remainder go to the equity holder.
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…under such prior leases, bills or accounts; and all payments now and hereafter made by [purchaser] shall be credited pro rata on all outstanding leases, bills and accounts due the Company by [purchaser] at the time each such payment is made.” (Emphasis added.) The effect of this rather obscure provision was to…