An authorized stock is the number of shares that a corporation's charter allows to sell.
Authorized stock is the legal number or limit of shares that a company allows or authorizes to be sold or put in the market. This factor of policy is applicable as per the charter that the corporation allows or is legally viable to provide.
- In the issue of sharing shares of a company, an organization can allow only a certain limit of shares that can be sold.
- This limit is the number of shares that a corporation can issue to its shareholders or investors.
- This stock is different from issued stock which refers to the actual number of stocks that the company has sold.
- Rather, authorized stock is the amount of shares that can be sold by the company and being provided in the market to be bought by shareholders or investors.
Thus, we can conclude that whatever limit a corporation allows or provides to be sold is the authorized stock. And it is only this number of shares that can be issued or given to a shareholder to buy.
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