Die Heuning Pot Literature Guide
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Finance Glossary

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Authorized Stock

Definition:

Big fat hairy deal vocab word and a key question on the 7 and others. Authorized are the number of shares a company can issue by charter. So... let's say Company XXX wants to buy Company Y. Company XXX has an authorized limit of 100 million shares. It currently has 85 million shares and 5 million options, yet unvested, outstanding. Technically it has 90 million shares outstanding. It wants to print shares to buy Company Y. But company Y wants 20% of the primary shares of Company XXX or 17 million shares. Company XXX cannot print the shares to buy Y. Why? Because it needs to get approval to change the charter - doable only by a majority vote of the outstanding shares at the time. Company XXX is not meant to refer to a producer of internet porn.

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