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Authorized shares

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.

Expanded definition

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.

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