How Do You Spell AUTHORIZED STOCK?
Pronunciation: [ˈɔːθəɹˌa͡ɪzd stˈɒk] (IPA) 
Pronunciation: [ˈɔːθəɹˌa͡ɪzd stˈɒk] (IPA)
Authorized stock refers to the maximum number of shares that a corporation is legally permitted to issue to investors or shareholders. Also known as authorized capital or authorized shares, this figure represents the limit of the company's ability to issue new shares of stock. The authorized stock is established during the formation of a company and is recorded in its articles of incorporation or charter.
This designation is crucial as it sets the parameters for the company's future capital structure and fundraising activities. It determines the maximum amount of equity securities that can be sold to shareholders, whether in the form of common stock or preferred stock. The authorized stock indicates the potential dilution of ownership stake for existing shareholders when new stock is issued, as well as the company's ability to raise capital through equity offerings.
It is important to note that authorized stock is not the same as issued stock or outstanding stock. Issued stock refers to shares that have been sold or distributed to shareholders, while outstanding stock refers to shares currently in circulation. If a company wishes to issue additional shares beyond the authorized stock limit, it must first seek approval from its shareholders and make the necessary amendments to its articles of incorporation or charter.
In summary, authorized stock sets the maximum number of shares a corporation can issue, providing a legal framework for the company's capital structure and equity fundraising endeavors.
The etymology of the word "authorized stock" can be traced back to the Middle English and Old French languages.
The word "authorize" originated from the Middle English word "autorisen", which came from the Old French word "autoriser". "Autoriser" is a combination of the Latin word "autor" meaning "author" or "originator", and the suffix "-iser" which denotes the act of making or causing.
The word "stock" has its origins in the Old English word "stoc" which means "trunk", "stump", or "post". Over time, it evolved to refer to a supply or provision of goods or merchandise.
The phrase "authorized stock" combines these two words to refer to the shares of a corporation or limited liability company that have been officially approved or permitted by the governing body. It signifies the maximum number of shares that a corporation is legally allowed to issue.
