What is the difference between authorized, issued, and outstanding stock?
Common stock or shares of stock can be classified as authorized, issued, or outstanding:
Authorized stock is the max amount of shares that a company can issue. Generally, a company will not issue 100% of the authorized stock, so issued stock will be less than the authorized amount. Issued stock can be held by the company, held by employees, or held by the general public. Outstanding stock represents stock that is held by the general public.
Below is an example of how a company’s stock might look in the various classifications:
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What is the difference between authorized and issued stock?
Authorized stock is the max amount of stock/shares that a company can issue to employees, issue to the general public, or hold as treasury stock. Issued stock will always be equal to or less than authorized stock.
What is the difference between issued and outstanding stock?
Stock can be owned by the company or shareholders (i.e. general public). Companies may hold back stock to incentive employees or to sell at a later date. Outstanding stock is the amount of shares actually owned by the general public. Therefore, the difference between issued and outstanding stock relates to the amount of stock the […]