A company’s authorized shares refer to the maximum number of shares a corporation can issue to its investors. The corporation’s Certificate of Incorporation outlines the number of authorized shares and classes of stock the corporation can issue.
If the corporation later decides it wants to issue shares which exceed what is authorized under the corporate charter, the corporation needs to amend its certificate of incorporation.
Example Authorized Shares for Corporation A
For example, Corporation A, a Delaware corporation, files a Certificate of Incorporation with the State of Delaware which authorizes the following shares:
- 10,000,000 shares of Class A Common Voting Stock with a Par Value of $0.001 per share
- 1,000,000 shares of Class B Common Nonvoting Stock with a Par Value of $0.001 per share
- 10,000 shares of Preferred Stock with a par value of $0.001 per share
Corporation A issues 5,000,000 shares of Class A common stock, 250,000 shares of Class B common stock, and 1,000 shares of preferred stock. The Corporation’s total shares outstanding are 5,251,000.