Definition

Noun: The maximum number of shares of capital stock that a corporation is legally permitted to issue, as specified in its articles of incorporation or charter. This is a fixed number that can only be changed with shareholder approval.

Usage

This term is used in corporate finance and law to describe a fundamental limit set in a company's founding documents. It is a key figure for investors and analysts, as it defines the potential for equity dilution.

Examples

• The company's authorized stock is 10 million shares, though only 5 million are currently issued and outstanding.
• Before the IPO, the board voted to increase the authorized stock to accommodate future fundraising.
• A comparison of issued shares to authorized stock shows the company has significant room to raise capital.

Advanced Usage

• Contrast with Issued Stock: It is crucial to distinguish authorized stock from (shares actually sold) and (issued shares held by investors).
• Authorized Share Capital: This is a synonymous term commonly used in British and Commonwealth corporate law.

Variants and Related Words

• Authorized Shares: A direct synonym for authorized stock.
• Authorized Capital Stock: A fuller, formal synonym.
• Issued Stock/Shares: The portion of authorized stock that has been allocated and sold to shareholders.
• Treasury Stock: Previously issued shares that have been repurchased by the corporation.

Synonyms

• Authorized Shares
• Authorized Capital
• Nominal Capital

Related Phrases

• Increase Authorized Stock: The corporate action of amending the charter to raise the maximum share limit.
• Shares Authorized but Unissued: The portion of authorized stock that has not yet been sold or allocated.

Noun

1. the maximum number of shares authorized under the terms of a corporation's articles of incorporation