Authorized shares, also known as authorized stock, are the maximum number of shares a company is legally allowed to sell. The number is determined at the time the company is created, and can only be increased or decreased by a vote of current shareholders.
Authorized stock includes common shares and preferred shares, and the company may hold back some of the total authorized shares, so that it can sell them to make money if needed in the future, without getting a shareholder vote. Knowing the number of authorized shares your company has, as compared to the number of issued shares, would indicate the potential for share dilution.
Recent Mentions on Fool.com
- 3 Stocks You Can Buy and Hold for Your Children Over the Next 50 Years
- Forget the Beretta M9 -- Here's a New Gun That Will Knock Your Socks Off
- 7,982,550 Reasons MGM Resorts Could Still Win in Las Vegas
- This Next-Generation Biotech Just Set the Stage for a Big 2015
- Is NVIDIA Becoming the Intel of Graphics Cards?
- Whole Foods Market Inc: 3 Takeaways From First Quarter Earnings