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. This is in contrast to the shares held as treasury stock and shares that have been retired, which are not included in this figure.

A company issues a share only once; after that, investors may sell it to another investor. When companies buy back their own shares, the shares remain listed as issued, even though they become classified as "treasury shares," because the company may resell them. For a small, closely held corporation, the original owners may hold all of the issued shares.

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Issued Shares

Recording Issued Shares

The number of issued shares is recorded on a company’s balance sheet as capital stock, or owners' equity. 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.

Issued shares are included when calculating market capitalization (issued shares multiplied by current share price) and earnings per share (EPS), which is the issued shares divided by earnings. Both figures help investors and analysts measure a company’s value and its relative performance.

Authorized shares are those a company’s founders or board of directors have approved in their corporate filing paperwork. Issued shares are those that the owners have decided to sell in exchange for the cash, which may be less than the number of shares actually authorized. Shares issued generate the assets or other value given for founding a company or growing it later on. For example, a company may retain authorized shares in order to conduct a secondary offering later (sometimes called a tender offering), or else to hold for employee stock options (ESO).

Issued Shares and Ownership

Ownership of a corporation can be measured by identifying which investors were issued shares at a company’s startup or via a secondary offering. Ownership may also be measured by counting 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 company issues 10 million shares out of 20 million authorized shares to an owner, and the owner’s shares are the only ones issued, the owner has 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 two million additional shares to an investor and offers three 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.