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Simple English definitions for legal terms
authorized shares
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A quick definition of authorized shares:
Authorized shares refer to the maximum number of shares of stock that a corporation is allowed to issue according to its charter or articles of incorporation. This includes both common and preferred stock. The owners of a majority of outstanding shares can vote to increase the amount of authorized shares. It is important to note that authorized shares do not necessarily represent the actual number of shares that have been issued or are currently outstanding.A more thorough explanation:
Authorized shares refer to the total number of shares of stock that a corporation is allowed to issue under its charter or articles of incorporation. This includes both common stock and preferred stock. The owners of a majority of the outstanding shares must give consent if the corporation wants to increase the amount of authorized shares.
For example, if a corporation has 1,000 authorized shares and has issued 500 shares to investors, it still has 500 authorized shares that it can issue in the future.