# Issued Shares vs. Outstanding Shares: Definitions and Examples

Issued shares refer to the number of shares a company has sold and distributed to its shareholders, including insiders and institutional investors. These shares form part of a company's equity, are detailed in financial reports, and differ from outstanding shares, which exclude treasury stock. Understanding these terms is crucial for grasping a company's ownership structure and market presence.  

Issued shares differ from [outstanding shares](https://www.investopedia.com/terms/o/outstandingshares.asp), which are market shares available to investors, excluding treasury shares. Issued shares can be contrasted with unissued ones, which have been authorized for future offerings but have not yet been issued.

### Key Takeaways

*   Issued shares are shares that a company has sold and are held by investors, insiders, or reserved for employee compensation.
*   Unlike outstanding shares, issued shares include both those available for trading and those held in the company's treasury.
*   Companies often retain authorized but unissued shares for future capital raises or employee stock options.
*   The number of issued shares affects calculations of market capitalization and earnings per share.
*   Ownership stakes can be projected using models based on issued and authorized shares, considering potential dilutions.

## Key Concepts of Issued Shares

A company issues a share only once. After that, investors may sell it to another investor on the secondary market. When companies buy back their own shares, the shares remain listed as issued, even though they are not classified as "[treasury shares](https://www.investopedia.com/ask/answers/what-is-treasury-stock/)" because the company may resell them. For a small, closely held corporation, the original owners may hold all the issued shares.

The number of issued shares is recorded on a company’s balance sheet as capital stock or [owners' equity](https://www.investopedia.com/terms/s/shareholdersequity.asp), while the shares outstanding (issued shares minus any shares in the treasury) are listed on the company’s quarterly filings with the Securities and Exchange Commission. The number of outstanding shares is also in the capital section of a company’s annual report.

> **Important**
>
> The number of issued and outstanding shares, which is used to calculate market capitalization and earnings per share, are often the same.

Authorized shares are approved by the company's founders or board of directors (BofD) in corporate filings. Issued shares are those the founders or BofD sell for cash, which may be less than the number of shares actually authorized.

Issued shares generate assets or value for founding or growing a company. For example, a company might keep authorized shares for a later secondary offering or for employee stock options.

## How Issued Shares Affect Ownership Structure

Ownership of a corporation is typically determined by examining who holds the issued shares. This includes shares distributed during the company's initial startup phase or through [secondary offerings](https://www.investopedia.com/terms/s/secondaryoffering.asp). One may consider not only the issued and outstanding shares but also those that could be issued in the future. This broader view is captured in the "fully diluted" calculation, which takes into account shares that would be issued if all authorized stock options and convertible securities were exercised.

Another way for ownership to be projected is by measuring the issued and authorized stocks. This approach, called the "working model" calculation, forecasts potential changes in shareholder positions based on the total number of shares a company may issue, along with those already issued. It's thus a speculative view of how ownership could evolve if the company fully uses its authorized share capital. It's important all board members use the same calculation when making decisions or plans for the business to maintain consistency.

### Practical Example of Issued Shares

If a [startup](https://www.investopedia.com/terms/s/startup.asp) issues 10 million shares out of 20 million authorized shares to an owner, and the owner’s shares are the only ones issued, the owner controls 100% of the corporation.

BofDs typically use the fully diluted or working-model calculation for planning and projecting. For instance, if the board believes it may issue two million additional shares to an investor and offers three million shares as stock options to high-performing employees, it might offer the founders additional stock options so they do not significantly dilute their ownership percentage.

## Comparing Issued Shares and Outstanding Shares

Issued shares represent all the stock a company has issued. Outstanding shares, meanwhile, are the shares circulating in the market owned by investors and available for them to trade.

Often, the number of issued and outstanding shares will be the same. However, there are cases, particularly with larger companies, where not all the shares issued will be in the hands of investors. For example, when a company [repurchases its shares](https://www.investopedia.com/terms/s/sharerepurchase.asp), they are no longer held publicly but kept in the company’s treasury instead. These shares would then count as issued shares but not as outstanding shares. Alternatively, outstanding shares are issued shares minus any shares in the treasury.

A publicly traded company’s total number of shares outstanding can usually be found on exchange platforms and in the shareholder’s equity section of the company balance sheet.

## What Is the Difference Between Authorized Shares and Issued Shares?

Authorized shares are the total number of shares a company can legally issue, while issued shares are the number the company has issued to date. The number of authorized and issued shares may be the same or different, in which case there would be more authorized than issued shares.

## Why Do Companies Issue Shares?

When a company issues shares, it is basically selling parts of ownership to the public in exchange for money. The goal is to raise capital without getting too saddled with debt. Companies initially issue shares via an [initial public offering](https://www.investopedia.com/terms/i/ipo.asp). Afterward, if they need another cash injection, they may decide to issue more shares via a rights issue.

## What Is the Disadvantage of Issuing Shares?

The disadvantages of going public include following extra regulations and disclosure requirements. Being a publicly traded company can bring extra scrutiny and increase accounting and other costs.  
Issuing more shares later also has disadvantages. Shareholders generally don’t like being asked to cough up more money if they don’t wish to have their ownership stake diluted. Rights issues can damage a company’s reputation and make investors want to steer clear. Thus, to raise the required funds, it’s usually necessary to offer the new shares at a notable discount to their current price.

## The Bottom Line

Understanding issued shares is crucial for grasping corporate finance and ownership dynamics. Issued shares are the subset of authorized shares sold to investors or reserved for employee compensation. Distinct from outstanding shares, issued shares include those held as treasury stock, affecting key financial metrics like market capitalization and earnings per share.

Companies strategically issue shares to raise capital, balancing between public offerings and maintaining control over the number of shares that enter the market. Keep in mind the potential impact on company ownership when additional shares are issued, as this can lead to dilution.