Unissued Stock

  

Categories: Stocks, IPO

It's stock sitting in the kitty, authorized to be issued...but not.

The board authorizes shares of stock to then be issued and granted to employees, or sold to the public, in one form or another. But if the shares aren't authorized, then they more or less don't exist.

So, um, take 'em out to play.

Related or Semi-related Video

Finance: What is Authorized Stock?2 Views

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finance a la shmoop what is authorized stock... well when a company goes

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public and gets all incorporated well it changes legal status and part of it [People in a meeting]

00:13

means having lots of meetings and signing more paperwork than most of us

00:17

see in a lifetime well one of those pieces of paper is a charter or legal [Legal document appears]

00:22

document which outlines a whole bunch of rules including the number of shares a

00:27

company can issue well this number of shares is called authorized stock [Document stamped authorized stock]

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because it's the maximum total number of shares the company is authorized by its

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charter to issue ....well let's say company XXX wants to buy company Y it's like a

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genetic coding industry... company XXX has an authorized

00:52

limit of a hundred million shares and currently has 85 million shares and five

00:57

million options yet unvested outstanding technically it has 90 million shares

01:03

outstanding..... it wants to

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print shares to buy company Y but company Y wants 20 percent of the [Company XXX printing stock]

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primary shares of the company XXX or 17 million shares no primary does not

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include options all right well company XXX cannot print enough share to buy Y [Shares printing]

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why? because it needs to get approval to change the charter and that is only

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doable by a majority vote of the outstanding shares at the time right and

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it's mostly common shareholders who will own those all right well the company has

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to have authorized shares to be able to make that transaction you know happen so

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that's authorized stock and now you know it isn't just stock that's been approved

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by you Mark Twain [Mark Twain sitting at a desk with stock]

Up Next

Finance: What is "when-issued"?
4 Views

When-issued is a trading condition that applies to structural changes in companies that result in a new entity with its own set of trading rules.

Find other enlightening terms in Shmoop Finance Genius Bar(f)