1: unissued shares definition
2: how unissued shares work
3: unissued shares vs outstanding shares
4: example of unissued shares
Opening information:
The unissued shares sentence breaks into two words unissued and shares, unissued means some of the materials or elements or items that are not released from the one thing. The thing would be anything.
Shares mean pieces of some whole materials, and unissued shares mean unreleased pieces of something.
So now let’s have a look at what are unissued shares, how unissued shares work in the stock market for corporate industries, and what is the difference between unissued shares and issued Shares, finally one example of unissued shares.
1: unissued shares definition
MR. Rotun is the CEO of a business in the production industry, he is goal is to make a successful company among other competitors around the world.
He is the one who founded the business and has now been a CEO in the business of his own public trading company.
When they became a publicly traded company before the 7 years, the SEC which means the Security and Exchange Commission would be authorized to issue a maximum of 5 million shares in the public market.
Among those 5 million shares, Rotun public business company had only issued or released 3 million shares in the market to raise the total capital of the industry.
And other 2 million shares remain held from the Rotun business, which is to be released in the future.
If the equity of the business increased, then the Rotun business would have a chance of an increase in authorized shares from the SEC.
Using the authorized shares, businesses would be able to decide how much they could release or not release on the total shares.
Currently, rotun has 2 million shares after issuing 3 million from the total authorized shares from the SEC.
Here these 2 million remaining shares are called unissued shares of the rotun organization. So now let’s have a deep seen into how unissued shares work in the stock market for corporate businesses.
2: how unissued shares work
The unissued shares are the ones, remaining after the released shares from the company among the total of authorized shares, but it’s not considered as unauthorized shares.
Any shares which are valued and given the power to issue and raise the capital of the business in the public market, from the security and exchange commission are considered as authorized shares.
But when authorized shares are issued by the company are called issued shares, and other remaining shares are considered as unissued shares of the company.
The unissued shares are not just shares, but the public business had enough equity to release more shares, even after the issued shares from the SEC perspective of total authority shares.
So if the unissued shares are not issued in all business years, then all the unissued shares are considered and related to the issued shares.
This means the people of Investors who own the issued shares would also become the owners for all unissued shares.
This shows if the authorized shares are unissued to the public, then authorized unissued shares are only dividends and distributed among the current owner of issued shares, only if a certain industry declares bankruptcy, merges, and acquisitions.
If the industry runs without any mergers and acquisitions, then all the remaining authorized shares after the issued shares, are considered unissued shares until it’s issued to public Investors.
Without issues of shares and purchases or holds by some Investors, unissued shares didn’t have any power or rights in the Corporate business.
So that unissued shares’ power and rights are all kept inside the company as equity to the issued shareowners.
Most of the stock Investors confuse the unissued and outstanding shares in the stock public market, let’s jump into the key difference in it.
3: unissued shares vs outstanding shares
The difference between the unissued shares and outstanding shares is, that unissued are the non-voter rights and do not have distinct Ownership shares of the companies.
Outstanding shares are the ones that contain real Ownership and voter rights to control the companies, these outstanding shares are also considered as issued shares in a Corporation. Therefore the key difference between unissued shares and outstanding shares is Ownerships.
To make more clear about the unissued shares let’s dive into one clear example.
4: example of unissued shares
Say the company N had 2000 authorized shares from the company and issued 1000 shares.
Among the 1000 issued shares, 800 shares are considered common shares and 200 shares are preferred shares. On the other hand, Company N had a remaining 1000 authorized shares after the release of a total of 2000 authorized shares in the company.
Here the 800 common shares are called as common outstanding shares, and the remaining 1000 authorized shares are called unissued shares.