Authorized Shares are established in a company’s founding documents and dictate the upper limit of stock that can be issued to founders, investors, employees, and other stakeholders. While a company might not issue all authorized shares immediately, keeping a reserve allows for flexibility in raising capital, incentivizing team members, and executing mergers or acquisitions. Changes to the number of authorized shares generally require board approval, shareholder consent, and often amendments to the corporate charter. For startups and growing businesses, strategically managing authorized shares is critical to maintain a balanced equity structure and support long-term growth initiatives.
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