Longtime entrepreneur Darin Pastor serves as the CEO of Capstone Affluent Strategies, a California-based wealth management firm. In this capacity, Darin Pastor oversees the purchase of outstanding shares of stock from other companies.
When a business incorporates, its number of authorized shares is specified. Within the incorporation documents, a company must include the number of authorized shares it can distribute. Since businesses do not have to issue every stock they authorize, most companies set their number of authorized shares in the millions or billions so they can issue stock comfortably as they grow.
Any stock that is either given to employees or sold to investors is issued stock. The number of issued shares given by a company cannot exceed the number of authorized shares mentioned in the business’ incorporation documents. If it does, shareholders must approve the increase in authorized shares before the company can give more.
Outstanding stock refers to any issued stock that has not been purchased by investors, given to employees, or reacquired by the business. The investment bank handling a company’s initial public offering usually sets the number of outstanding shares, but this number will change as the company buys back its stock or uses the stock to compensate employees.