AUTHORIZED SHARES

The maximum number of shares a company is allowed to issue. Generally, the company's charter specifies the
number of authorized shares, but shareholders can increase or decrease it according to procedures listed in
the charter. Typically, the number of authorized shares is larger than the required amount in order to give a
company the greatest amount of flexibility. Authorized shares are also called authorized capital stock or simply
authorized stock.

Authorized Capital Stock

The number of shares of capital stock that a business may issue. Authorized capital stock is stated in a firm's
articles of incorporation; changes in it may occur only if approved by the stockholders. The number of shares
authorized often greatly exceeds the number actually issued. In this way, management can issue more shares to
raise additional funds, or it can use the shares to make an acquisition. Also called shares authorized.
Issue
A particular financial asset.

Issue - A set of securities that a company or government offers for sale. That is, when a company
sells stocks or bonds to the public (or offers them for private placement) the collection of stocks or bonds is said
to be an issue. If the company or government is selling a set for the first time, it is said to be making a new
issue. Typically, issues of securities may be bought and sold on the open market.
AUTHORIZED STOCK
The maximum number of shares that a corporation is legally permitted to issue, as specified in its articles of
incorporation. Authorized stock, also known as authorized shares or authorized capital stock, is also usually
listed in the capital accounts section of the balance sheet. Authorized shares should not be confused with
outstanding shares, which are the number of shares the corporation has actually issued that are held by the
public.
AUTHORIZED STOCK'
The number of authorized shares is typically higher than those actually issued, which allows the company to sell
more shares if it needs to raise additional funds. For example, if a company had 1 million authorized shares, it
might only sell 500,000 of the shares during its IPO. That would leave 500,000 shares unissued. The company
might distribute some as stock options to attract and retain employees. It might sell others in a secondary
offering to raise more money in the future. Another reason a company might not want to issue all of its
authorized shares is to maintain a controlling interest in the company and prevent the possibility of a hostile
takeover.
Amazons corporate charter, for example, states the companys total authorized stock shall include 5 billion
shares of common stock and 500 million shares of preferred stock. The charter permits Amazon to increase its
authorized stock if there isnt enough unissued common stock to allow the conversion of preferred stock.
Corporate charters often require shareholder approval to increase the number of shares of authorized stock.

One reason an investor might want to know how many authorized shares a company has is to analyze the
potential for stock dilution. Dilution reduces a stockholders share of ownership and voting power in a company
and reduces a stocks earnings per share when new stock is issued. The larger the difference between the
number of authorized shares and the number of outstanding shares, the greater the potential for dilution.
AUTHORIZED CAPITAL STOCK
- The maximum value of securities that a company can legally issue. This number is specified in
the memorandum of association (or articles of incorporation in the US) when a company is incorporated, but
can be changed later with shareholders' approval.
Authorized share capital may be divided into (1) Issued capital: par value of the shares actually issued.
(2) Paid up capital: money received from the shareholders in exchange for shares. (3) Uncalled capital: money
remaining unpaid by the shareholders for the shares they have bought. Also called authorized capital, authorized
stock, nominal capital, nominal share capital, or registered capital.
SHARES OUTSTANDING
The number of shares an issuing entity, such as a publicly-traded company, has not repurchased and that are
available for trade by the general public. This is sometimes known as collection float or float.

OUTSTANDING CAPITAL STOCK

The number of shares of capital stock that have been issued and that are in public hands. Outstanding stock
excludes shares issued but subsequently repurchased by the issuer as Treasury stock. Outstanding stock is used in
the calculation of book value per share and earnings per share. Also called shares outstanding, stock outstanding.

Par value is the face value of a bond. It is the principal amount that the lender (investor) is lending to the borrower (issuer).
How it works/Example:
Let's assume Company XYZ issues $1,000,000 in bonds to the public. It may do so by issuing 1,000 bonds, each with a $1,000 par value.
When each bond matures, the borrower will pay back the par value of $1,000 to the lender.
Most corporate bonds have $1,000 face values, but municipal bonds often have $5,000 par values and federal bonds often have $10,000 par
values.
Stock is also assigned a par value, though it is generally a very small, arbitrary value (usually $0.01) assigned to each share. Preferred
stock may be assigned a higher par value because it is often used to calculate dividends.
Why it Matters:
For bonds, par value is a pricing benchmark. When the bond's price is below the par value, the bond is selling "at a discount"; when the bond's
price is above par value, the bond is selling "at a premium."
The difference between a bond's price and a bond's par value cannot be overemphasized. In fact, it's one of our 3 Most Deadly Misconceptions
About Bonds.
Par value has little significance for equities because it generally does not influence the stock price itself. The cumulative par value of all the
company's shares outstanding is reflected in the shareholders' equity section of the balance sheet.

What is the difference between par and no par value

stock?
Some states' laws require or may have required common stock issued by corporations residing in
their states to have a par value. The par value on common stock has generally been a very small
amount per share. Other states might not require corporations to issue stock with a par value. So
the par value on common stock is a legal consideration.
From an accounting standpoint, the par value of an issued share of common stock must be
recorded in an account separate from the amount received over and above the amount of par
value. For example, if a corporation issues 100 new shares of its common stock for a total of
$2,000 and the stock's par value is $1 per share, the accounting entry is a debit to Cash for
$2,000 and a credit to Common StockPar $100, and a credit to Paid-in Capital in Excess of Par
for $1,900. In total the Cash account increased by $2,000 and the paid-in capital reported under
stockholders' equity increased by a total of $2,000 ($100 +$1,900).
If a corporation is not required to have a par value or a stated value and the corporation issues
100 shares for $2,000, then the accounting entry will be a debit to Cash for $2,000 and a credit
to Common Stock for $2,000.
In other words, when the issued stock has a par value, the proceeds from the issuance gets
divided between two of the paid-in capital accounts within stockholders' equity. If the issued
stock does not have a par value, the proceeds from the issuance goes into just one paid-in
capital account within stockholders' equity.