The number of authorized shares sold to and held by a company’s stockholders. Issued shares may be held by members of the general public, investors in the company itself, employees and other insiders. Also referred to as outstanding shares.
When a corporation is legally formed, its charter must contain terms outlining the number of shares that the company is authorized to issue. This number represents a maximum or ceiling, not a mandate. Oftentimes, companies do not choose to issue all of the shares they are authorized to. Some prefer to reserve a certain number of shares to be exercised according to employee stock options, save shares for a secondary offering or otherwise “hold off” on issuing all authorized shares at any given time. As a result, the number of shares a company is authorized to issue and the number of issued shares that exist at any given time are rarely the same.
Most of the time, a company can refer to its balance sheet in order to glean its current number of issued shares. This number will be listed under a “Capital Stock Issued and Outstanding” header. Issued share totals factor in both preferred stock and common stock. The number of issued shares in the marketplace at any given time may rise in the event of a stock split and the exercise of either stock options or warrants.
Accountant: “I just wanted to provide you with an update in advance of the secondary offering.”
Executive: “Go right ahead.”
Accountant: “The company is authorized to issue 2,000 shares. As there are only 420 issued shares at present and no shares reserved for issuance, the company can technically issue as many as 1,580 shares during the secondary offering.”