What’s the difference?
Issued SharesIssued 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.
Treasury StockWhen 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?
- 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 )