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Definition of Authorized Shares

A corporation's authorized shares represents the maximum number of shares the company can issue. The authorized shares will be set out in the corporation's charter document (e.g., the certificate of incorporation). For startups, the authorized shares will increase in connection with priced rounds of financing as the corporation issues more shares to investors in exchange for their investment. Authorized shares should not be confused with outstanding shares, which refers to the number of shares held by shareholders.

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