Issued Shares

Loading the player...

What are 'Issued Shares'

Issued shares are the authorized shares sold to and held by the shareholders of a company, regardless of whether they are insiders, institutional investors or the general public, as shown in the company’s annual report. Issued shares include the stock a company sells publicly to generate capital and the stock given to insiders as part of their compensation packages. Unlike shares held as treasury stock, shares that have been retired are not included in this figure.

BREAKING DOWN 'Issued Shares'

A company issues a share only once; after that, the investor may sell it to another investor. When companies buy back their own shares, the shares remain listed as issued because the company may resell them. For a small, closely held corporation, the original owners may have all issued shares.

Recording Issued Shares

The number of issued shares is recorded on a company’s balance sheet as capital stock. Shares outstanding are listed on the company’s quarterly filings with the Securities and Exchange Commission (SEC). The number of outstanding shares is also found in the capital section of a company’s annual report.

Importance of Issued Shares

Issued shares are included when calculating market capitalization, or issued shares multiplied by current share price, and earnings per share (EPS), or issued shares divided by earnings. Both numbers help investors measure a company’s value and performance.

Comparing Authorized and Issued Shares

Authorized shares are the shares a company’s founders approved in their corporate filing paperwork before startup. Issued shares are the shares the owners decided to exchange for the cash, assets or other value given for founding the company. This is called capitalizing the corporation.

Issued Shares and Ownership

Ownership may be measured by which investors were issued shares at a company’s startup. Ownership may also be measured by issued and outstanding shares along with those that may become issued if all authorized stock options are exercised, called the fully diluted calculation. In addition, ownership may be measured by using issued and authorized stock as a forecast of the position shareholders may be in at a future date, called the working model calculation. All board members must use the same calculation when making decisions or plans for the business.

For example, if a startup issues 10 million shares of 20 million authorized shares to an owner, and the owner’s shares are the only ones issued, he owns 100% of the corporation. Boards typically use the fully diluted or working model calculation for planning and projecting. For example, if the board believes it may issue 2 million additional shares to an investor and offers 3 million shares as stock options to high-performing employees, it may offer the founders additional stock options so they do not significantly dilute their ownership percentage.

RELATED TERMS
  1. Authorized Stock

    The maximum number of shares that a corporation is legally permitted ...
  2. Authorized Share Capital

    The number of stock units that a publicly traded company can ...
  3. Outstanding Shares

    A company's stock currently held by all its shareholders, including ...
  4. Share Capital

    Funds raised by issuing shares in return for cash or other considerations. ...
  5. Dilution

    A reduction in the ownership percentage of a share of stock caused ...
  6. Fully Paid Shares

    Shares issued in which no more money is required to be paid to ...
Related Articles
  1. Investing

    What are Issued Shares?

    Issued shares are the amount of authorized stocks a company’s shareholders buy and own. The annual report shows the number of outstanding shares.
  2. Investing

    The Basics Of Outstanding Shares And The Float

    We go over different types of shares and what investors need to know about them.
  3. Investing

    How Does Dilution Work?

    Dilution refers to the reduction in the percentage equity ownership of a company due to additional equity being issued to other owners.
  4. Investing

    Getting The Real Earnings

    EPS helps investors analyze earnings in relation to changes in new-share capital.
  5. Investing

    Assess Shareholder Wealth With EPS

    Find out if management is doing its job of creating profit for investors.
  6. Investing

    What Are Corporate Actions?

    Be a savvy investor - learn how corporate actions affect you as a shareholder.
  7. Markets

    Understanding Rights Issues

    Not sure what to do if a company invites you to buy more shares at discount? Here are some of your options.
  8. Investing

    Getting Acquainted With Treasury Stock

    When publicly traded businesses decided to buy back some of their outstanding shares, it becomes treasury stock. Treasury stock confers no voting rights or dividends, but helps boost shareholder ...
  9. Investing

    How To Pick Winning Penny Stocks

    Cheap doesn't always equal good. When choosing penny stocks, investors would be wise to note several key factors that affect the way these stocks trade.
  10. Investing

    What's A Company’s Worth, And Who Determines Its Stock Price?

    A company’s worth is the same as its market capitalization. Market capitalization is stock price multiplied by number of outstanding shares.
RELATED FAQS
  1. Why is the value of capital stock important to public shareholders?

    Understand what capital stock is and how it's issued and authorized. Learn why the value of capital stock important to public ... Read Answer >>
  2. Why would I need to know how many outstanding shares the shareholders have?

    Find out why shareholders should know how many outstanding shares have been issued by a corporation, and learn what happens ... Read Answer >>
  3. What is the difference between issued share capital and subscribed share capital?

    Find out about the difference between subscribed share capital and issued share capital, including an explanation of the ... Read Answer >>
  4. What is the difference between authorized shares and outstanding shares?

    Calculating financial ratios can help investors understand a company's financial position, but only when a knowledge of various ... Read Answer >>
  5. Why do companies release financial figures in terms of fully diluted shares outstanding?

    Learn why companies release their financial figures in terms of fully diluted shares outstanding so as to give a true picture ... Read Answer >>
  6. What is authorized stock?

    Authorized stock represents the maximum number of common shares that can be issued legally by the company as stated in the ... Read Answer >>
Hot Definitions
  1. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  2. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  3. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
  4. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks ...
  5. Omnibus Account

    An account between two futures merchants (brokers). It involves the transaction of individual accounts which are combined ...
  6. Weighted Average Life - WAL

    The average number of years for which each dollar of unpaid principal on a loan or mortgage remains outstanding. Once calculated, ...
Trading Center