How Do You Spell AUTHORIZED STOCKS?
Pronunciation: [ˈɔːθəɹˌa͡ɪzd stˈɒks] (IPA) 
Pronunciation: [ˈɔːθəɹˌa͡ɪzd stˈɒks] (IPA)
Authorized stocks refer to the maximum number of shares that a corporation is legally permitted to issue. These stocks are sanctioned under the corporate charter or articles of incorporation, which outlines the company's structure and parameters. This limit is established to ensure that the corporation does not exceed a certain level of ownership and control.
The authorized stocks do not indicate the actual number of shares that have been issued by the company but rather signify the amount that may be potentially issued in the future. This provision allows the corporation to adapt to changing financial needs, such as increasing capital through equity offerings, stock splits, or acquisitions.
The authorized stock limit can vary depending on the corporation's size, nature of business, and regulatory requirements. It is typically set at a level that allows for flexibility and future growth, while still maintaining control over ownership integrity and dilution. Any issuance of shares beyond the authorized stock limit requires an amendment to the corporate charter or approval from the shareholders through an authorized stockholders' meeting.
It is important to note that authorized stocks do not guarantee that all the shares will be issued, as it depends on market conditions, funding requirements, and strategic decisions made by the company's management. Furthermore, authorized stocks are separate from the issued and outstanding stocks, which represent the actual shares held by shareholders.
The term "authorized stocks" does not have a distinct etymology because it is a technical term commonly used in finance and business contexts. However, we can examine the origins of the individual words to gain a better understanding:
1. Authorized: The word "authorized" is derived from the Middle English word "autorisen" which means "to sanction". It ultimately comes from the Latin word "auctorizare" which means "to give authority to". The term refers to something that has been officially approved or allowed.
2. Stocks: The word "stocks" originated from the Old English word "stoc" which referred to a tree trunk or a post. Over time, it came to represent the wooden sticks or logs used in various contexts. In finance, "stocks" are units of ownership in a company, representing a share of the company's assets and profits.
