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finance a la shmoop what is authorized stock... well when a company goes

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public and gets all incorporated well it changes legal status and part of it [People in a meeting]

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means having lots of meetings and signing more paperwork than most of us

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see in a lifetime well one of those pieces of paper is a charter or legal [Legal document appears]

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document which outlines a whole bunch of rules including the number of shares a

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company can issue well this number of shares is called authorized stock [Document stamped authorized stock]

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because it's the maximum total number of shares the company is authorized by its

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charter to issue ....well let's say company XXX wants to buy company Y it's like a

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genetic coding industry... company XXX has an authorized

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limit of a hundred million shares and currently has 85 million shares and five

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million options yet unvested outstanding technically it has 90 million shares

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outstanding..... it wants to

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print shares to buy company Y but company Y wants 20 percent of the [Company XXX printing stock]

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primary shares of the company XXX or 17 million shares no primary does not

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include options all right well company XXX cannot print enough share to buy Y [Shares printing]

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why? because it needs to get approval to change the charter and that is only

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doable by a majority vote of the outstanding shares at the time right and

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it's mostly common shareholders who will own those all right well the company has

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to have authorized shares to be able to make that transaction you know happen so

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that's authorized stock and now you know it isn't just stock that's been approved

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by you Mark Twain [Mark Twain sitting at a desk with stock]

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