What happens when there is undersubscription of shares? Are the shares still issued?

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Generally, In case of undersubscription of shares, shares will be forfeited & the monies will be refunded to the applicant's. But if the issuer has an agreement with underwriters, they take the responsibilty to subscribe or purchase the remaining shares, In this case issue process will be further processed & allotment will be made to the applicant's. Later underwriters will offload the stocks to retail investors or any subscriber of the portion offered.