What is Issued Shares?
647 reads · Last updated: December 5, 2024
Issued shares are the subset of authorized shares that have been 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.Thus, authorized shares are the total amount a company can ever issue or sell, and issued shares are the portion of authorized shares that a company has sold or otherwise placed in the market, including shares they hold in their treasury.Issued shares also differ from outstanding shares, or the number of shares that are in the market and available for purchase by investors but do not include shares the company holds in its treasury. Issued shares may be contrasted with unissued shares, which have been authorized for future offering but have not been issued yet.
Definition
Issued shares refer to the subset of authorized shares that have been sold by the company and are held by shareholders, whether they are insiders, institutional investors, or the general public. Issued shares include those publicly offered by the company to raise capital and those given to insiders as part of compensation incentive plans.
Origin
The concept of issued shares emerged with the development of the joint-stock company system. Companies issue shares to raise funds, a practice dating back to the 17th century with the Dutch East India Company. As modern capital markets evolved, issued shares became a crucial metric for assessing a company's capital structure.
Categories and Features
Issued shares can be categorized into common stock and preferred stock. Common stockholders typically have voting rights and a claim on dividends, while preferred stockholders have priority over common stockholders in the event of liquidation. Features of issued shares include their liquidity, market value, and impact on company control.
Case Studies
For example, Apple Inc. has raised significant capital through issuing shares to support its innovation and expansion plans. Another example is Tesla, which has conducted multiple stock offerings to fund its electric vehicle production and research.
Common Issues
Investors often confuse issued shares with outstanding shares. Issued shares include treasury shares held by the company, whereas outstanding shares do not. Additionally, investors should be aware that an increase in issued shares can dilute the ownership percentage of existing shareholders.
