The difference between a company's authorized shares and its outstanding shares is what the company retains in its treasury.Those shares which have already been issued to the public, known as outstanding shares, make up some portion of a company's authorized stock.Authorized stock refers to the maximum number of shares a publicly-traded company can issue, as specified in its articles of incorporation or charter.
Outstanding shares can never exceed the authorized number, since the authorized shares total is the maximum number of shares that a company can issue. A company that issues all of its authorized stock will have its outstanding shares equal to authorized shares. If outstanding shares are less than authorized shares, the difference (unissued stock) is what the company retains in its treasury. The total number of a company's outstanding shares as seen in the balance sheet is the sum of float and restricted shares. In addition, restricted shares, which are reserved for employee compensation and incentives, are also part of authorized shares. The number of shares actually available to trade is known as float. The shares that are issued to the public to trade on the open markets comprise all or a portion of a company's authorized stock. These shares are referred to as authorized stock. When a company is formed, it decides on the maximum number of shares it would like to offer.
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