# Unissued Stock: What It Is and How It Works

![Unissued Stock](https://www.investopedia.com/thmb/QIZdSlyTjQnfRbbvGLn0f8QU5aQ=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/DDM_INV_unissued-stock_final-307dbc9d49d741398982f7aa0b927491.jpg)

*Unissued stock is a portion of a company's authorized shares. — Investopedia / Eliana Rodgers*

> **Definition**
>
> Unissued stock represents shares a company is allowed to issue but hasn't yet offered to employees or other investors.

## What Is Unissued Stock?

Unissued stock consists of company [shares](https://www.investopedia.com/terms/s/shares.asp) that remain inactive; they haven't been released or made available for purchase. As such, companies do not print [stock certificates](https://www.investopedia.com/terms/s/stockcertificate.asp) for unissued shares. Unissued shares are normally held in a company's treasury. Their number typically has no bearing on shareholders.

### Key Takeaways

*   Unissued stock is a class of company shares that are not circulating or up for sale by the company on the market.
*   The number of unissued shares can be calculated by subtracting the outstanding shares plus treasury stock shares from the total number of authorized shares.
*   Unissued shares may be irrelevant to current stockholders because they do not qualify for voting rights or receive dividends.
*   Unissued stock may indicate the potential for events or developments that may dilute a company's earnings per share.

## Understanding Unissued Stock

When a company goes public, it authorizes a certain number of shares to be created in its charter or articles of incorporation. These shares are referred to as [authorized stock](https://www.investopedia.com/terms/a/authorizedstock.asp). Authorized stock is comprised of all stock that has been created, including shares up for sale to investors and issued to employees, as well as any shares not up for sale. The former is called [outstanding stock](https://www.investopedia.com/terms/o/outstandingshares.asp), while the latter is referred to as unissued shares. Companies do not print up certificates for unissued stock, which are held in the company's treasury.

The number of unissued shares can be calculated by taking the total shares authorized for issuance and subtracting this from the total shares outstanding, plus [treasury stock](https://www.investopedia.com/terms/t/treasurystock.asp), from the total number of authorized shares. Treasury stocks are the shares repurchased by a company.

Unissued shares are not relevant to stockholders in the sense that these shares do not qualify for voting rights, nor do they receive [dividends](https://www.investopedia.com/terms/d/dividend.asp). But this can change, as they represent the possibility for a [dilution](https://www.investopedia.com/terms/d/dilution.asp) in the value of existing shareholder ownership—and thus share value—should the company choose to issue additional shares of stock in the future.

> **Important**
>
> Unissued stock may dilute existing shareholder value if a company decides to release more stock in the future.

Analysts and investors closely monitor a company's plans for the issuance of previously unissued shares. Funding plans that call for the issuance of shares could be dilutive to the company's [earnings per share](https://www.investopedia.com/terms/e/eps.asp) (EPS).

Though they represent a potential source of ownership and earnings dilution for investors, unissued shares are not included in fully diluted earnings per share calculations. But earnings per share calculations do take into account the potential for convertible securities to be converted into equity as well as stock options granted but not yet exercised.

## Unissued Stock vs. Treasury Shares

Unissued stock is generally not the same as treasury stock. Treasury stock represents any shares that have already been issued and sold but have subsequently been [repurchased by the company](https://www.investopedia.com/terms/s/sharerepurchase.asp). But the lines between the two may be slightly blurred, as some companies may choose to list these shares as unissued stock.

Companies that choose to list treasury shares as unissued stock have [corporate charters](https://www.investopedia.com/terms/c/corporatecharter.asp) that allow for the issuance of a large number of stock shares to provide maximum flexibility in the event that future stock sales are needed. A company might disclose in the notes of its financial statements that it has the authorization to issue 10 million shares, but only a fraction of that amount might be both issued and outstanding.

Let's look at a real example. A 2016 8-K filed with the [Securities and Exchange Commission](https://www.investopedia.com/terms/s/sec.asp) (SEC) by Dollar Tree ([DLTR](https://www.investopedia.com/markets/quote?tvwidgetsymbol=DLTR)) states: "Shares purchased under the share repurchase authorizations are generally held in treasury or are canceled and returned to the status of authorized but unissued shares."

> **Article Sources**
>
> 1.  Dollar Tree. "[Form 8-K - May 5, 2016](https://www.dollartreeinfo.com/static-files/dbbde8f8-6ee8-43de-8a81-6c6f30296c21)," Page 10.