Issued Shares v. Outstanding Shares

Issued Shares v. Outstanding Shares

What’s the difference?

Issued Shares

Issued shares are the shares of stock that are sold to you by the company.  For example, if XYZ company sells 10,000 shares of common stock from its 10,000,000 authorized common shares, the company then has 10,000 shares issued and outstanding, and 10,000,000 authorized shares.  Notice that the authorized shares don’t change when shares are issued; it remains the same. The issued shares are held by the shareholders of the company.  Typically a shareholder receives a stock certificate evidencing their ownership in the company. The shareholders can consist of individuals inside the company, investors such as venture capitalists, private equity firms, and/or the general public. Google stock certificate

Treasury Stock

When a company reacquires issued shares of its own stock and does not retire them, the company is said to have “treasury stock.”  The number of outstanding shares is equal to the number of issued shares minus the number of treasury shares.  
Example:
Let’s continue with the example from above.   The company has 10,000,000 authorized common shares, and then sold 10,000 common shares.  Some time goes by and the company decides to reacquire 1,000 of those 10,000 shares.  Again, this is just an example.  So what are the results?
Results:  
  • 10,000,000 authorized common shares
  • 10,000 common shares issued (equals total amount of treasury shares plus (+) outstanding shares)
  • 1,000 treasury shares
  • 9,000 common shares outstanding (equals total amount of issued shares (10,000) minus (-) total amount of treasury shares )
Visit Treasury Stock Uses and learn powerful and effective ways your company can use it.  

Outstanding Shares

The outstanding shares are the shares of stock that are owned by the shareholders.  As we can see from the example above, they do not include the treasury shares.  These are only shares that are currently held by a person or entity. Most times companies simply quote the issued shares and the outstanding shares; the treasury shares are rarely mentioned.

Comparison Issued v. Outstanding

The Issued Shares

Includes treasury shares

The Outstanding Shares

Does not include treasury shares   For an overview see How the Stock Market Works:  The Basics    
BizandTravelBlog.com is published by Virginia K. Sourlis, an attorney licensed in the state of New Jersey. This site does not provide legal advice and it does not create an attorney-client relationship with anyone. This should not be considered legal advice. You should seek an attorney for your own situation. This website is for informational purposes only. Any and all views and opinions expressed on this site are solely those of the author and do not reflect the views of Virginia’s law firm. BizandTravelBlog.com is not associated with any organization, group or institution, unless otherwise specifically noted.
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