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What is shares outstanding

what is shares outstanding


Shares Authorized, Issued and Outstanding

Three terms describe the status of particular shares of stock: authorized, issued, and outstanding.

Shares are authorized within the articles of incorporation of the company. Authorization does not affect the accounting records because no money has been received for the stock at this point. This simply represents the upper limit on the number of shares that the company can issue. Shareholder approval is normally required when a company wants to increase the number of shares authorized.

Shares are issued when the company sells them to an investor and receives cash or some other benefit in return.

Once issued, shares are outstanding as long as investors hold them and the company has not repurchased them.


the corporation purchases its own stock through a share buyback, an account called treasury stock is created to hold the stock. These shares are no longer considered shares outstanding, and they neither vote nor receive dividends. Treasury stock appears as a negative amount, reducing shareholders’ equity, because this amount has been returned to previous shareholders.

Treasury stock can either be held for reissue or cancelled by the company. If a part of employee compensation is share based the shares employees receive mat be previously unissued shares or they may be treasury shares.

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Category: Forex

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