What Do Issued Shares Mean?

The approved shares that have been sold to and are held by a company’s shareholders are called issued shares. These shareholders can be insiders, institutional investors, or regular people (as shown in the company’s annual report). Issued shares are the stock that a business sells to the public to raise money and the stock that it gives to employees as part of their pay.

Approved shares are the maximum number of shares a company can sell or give out. Issued shares, which include shares the company holds in treasury, are the number of approved shares the company has sold or otherwise put on the market.

These are different from outstanding shares. Outstanding shares are the number of shares on the market that buyers can buy. They do not include shares that the company holds in its treasury. Issued shares differ from unissued ones, which have been approved for sale but have not yet been sent out.

How to Understand Issued Shares

A company only gives out a share once. Investors can then sell it to another trader on the secondary market. When a business buys back its shares, they are still listed as issued but are now called “treasury shares” because the company can sell them again. In a small, closely held business, the original owners may still own all the shares that have been given.

A company’s balance sheet shows the number of issued shares as capital stock, also known as owners’ equity. On the other hand, the number of shares outstanding is shown on the company’s weekly SEC filings. In the capital part of a company’s annual report, you can also find the number of still valid shares.

Market capitalization and earnings per share (EPS) are based on the number of shares that have been given and those that are still outstanding. Often, these numbers are the same.

Authorized shares are the ones that a company’s founders or board of directors (B or D) have agreed to be issued. These are the ones that the owners have chosen to sell for cash. The number of issued shares may be less than that of approved shares.

The assets or other worth given for starting a business or growing it later on come from the issued shares. A company might keep approved shares to make a secondary offering (also known as a “tender offering”) later on, or they might hold them for employee stock options (ESO).

Shares given out and ownership

To find out who owns a company, you can look at which buyers were given shares when the company first started up or in a later offering. Another way to figure out who owns something is to add up all the issued and outstanding shares and the shares that could be issued if all approved stock options are exercised. This is called the “fully diluted” calculation.

Issued and authorized stock can also be used to estimate the position shareholders may be in at a later point and be used to measure ownership. The working model formula is the name for this. When the board makes choices or plans for the business, everyone must use the same math.

Case in Point

For instance, if a startup company gives an owner 10 million of the 20 million authorized shares, and those are the only shares ever given out, the owner owns the whole business.

When boards plan and make predictions, they usually use the fully diluted or working-model estimate. On the other hand, if the board thinks it can give two million more shares to an investor and three million shares as stock options to top workers, it might give the founders more stock options so they don’t lose much of their ownership stake.

Conclusion

• Issued shares are all of a company’s ownership shares owned by investors, insiders, and people waving money for employee pay.
• Issued shares include treasury shares, which a company buys back from owners. This is different from outstanding shares.
• The board of directors of a company must first give permission and agree to the number of shares that will be released.