Authorized Shares – this term refers to the number of shares of common stock or preferred stock that a company is authorized to issue on a particular date.  It is important to know this number if you are a shareholder or investor considering making an investment in a company. If a company has almost as much common stock issued and outstanding with its shareholders as it is authorized to issue, then it may be necessary to have a shareholder’s meeting or a board meeting, depending on the state law, to increase its number of authorized shares.

                Most microcap companies may need to increase this number from time to time to keep raising capital and executing their business plan, especially if they have a high burn rate. Selling equity is the most common way for microcap companies to raise capital until they have sufficient assets or cash flow to obtain bank financing or debt financing from a private lender.