Authorized Vs. Issued Shares: What's The Difference?

Starting your own business involves many decisions, from choosing the right corporate structure to allocating equity. Proper planning is crucial for building success and reducing management costs down the line. If you opt for setting up a traditional c-corporation (in this case, the traditional C-Corporation), you'll need to consider how to structure ownership for long-term growth.

What Are Authorized Shares And Issued Shares?

In traditional C-corporations, generally speaking, shares may be divided among three broad categories: authorized shares, issued shares, and treasury shares. Authorized shares are stated in the company's incorporation document filed with the State (typically called the Certificate of Incorporation) and are the maximum number of shares the company is lawfully permitted to issue without amending the original Certificate of Incorporation. Issued shares represent the portion of shares that a company has either sold or placed in the market.