Issued Shares vs Outstanding Shares

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The maximum number of shares a Company can issue is known as ‘Authorized Shares’. Out of these authorized shares, the actual shares a company issue is known as ‘Issued Shares‘. And out of these issued shares, the shares that promoters, major investors like angel investors and venture capitalists, and the general public like us own are known as ‘Outstanding Shares’.

Confused? Don’t worry. The whole article is going to be a guide on issued shares vs outstanding shares and other closely related topics.

Concept of Issued Shares vs Outstanding Shares

We have just talked about Outstanding shares being a part of Issued shares and again Issued shares being a part of Authorized shares.

So, doesn’t it make sense to know the whole concept and to start from the start? And by the end of the topic, your question about issued shares vs outstanding shares will get cleared.


Take a look at this diagram:

Authorized shares, Issued shares, Unissued shares, Outstanding shares, Treasury shares, Restricted shares and free float shares – I bet if you know these terms you know, 100%, issued shares vs outstanding shares.

So, let’s know.

  • Authorized Shares:

The maximum number of shares that a company can issue in its whole lifetime is known as authorized shares. The promoters decide on this number and mention it in the company’s MOA (Memorandum of Association) at the start of the company.

Owners of the company can increase the number of authorized shares later by taking the approval of the shareholders.

Authorized shares consist of both equity and preference shares.

For example, 
A company has 1000 authorized shares which means that the company can't issue more than 1000 shares.
  • Issued Shares:

If the company wants, it can issue all the shares to the investors but companies don’t do it while issuing shares via IPO, FPO, Rights Issue etc. They issue a part of authorized shares and the number of shares the company issue is known as Issued Shares.


The shares were issued to the public, meaning there would be investors who bought these shares. These investors can be promoters, angel investors, venture capital, retail investors like us, high net worth individuals, and other investors including institutional investors like mutual fund houses, insurance companies, pension funds, etc.

For example, 
The company issued only 600 shares out of 1000. These 600 shares are issued shares.
  • Unissued Shares:

Authorized shares – Issued shares = Unissued shares

Companies keep the shares unissued for future issuance. Say, a company wants capital but doesn’t want to raise it through debt funding. Then what? The only way remains is equity funding and it will happen by issuing the unissued shares.

For example,
1000 - 600 = 400; these 400 shares are unissued shares.
  • Treasury Shares:

Treasury shares are a part of Issued shares. Let’s gossip, how?


Companies have issued shares, those shares were bought by the investors who are now shareholders of the company. Because of various reasons, companies can repurchase their shares from the shareholders through a corporate action called ‘Share Buyback‘.

The repurchased shares or bought back shares by the company are known as ‘Treasury shares’.

For example, 
Out of the 600 issued shares, let's say, company repurchased 100 shares. These 100 shares will be considered as treasury shares.
  • Outstanding Shares:

Issued shares – Treasury shares = Outstanding shares

Is it clear to you how outstanding shares are part of issued shares? You take issued shares then reduce treasury shares from them and what remains are outstanding shares.


Outstanding shares are issued shares that aren’t bought back by the company; this means they’re still in the market and held by various shareholders that we have mentioned semi-recently.

For example, 
600 - 100 = 500; these 500 shares are outstanding shares.
  • Restricted Shares:

The outstanding shares – held by the promoters, angel investors & venture capitalists and other major investors – which are not available for trading in the stock market are known as restricted shares.

The name itself, restricted shares, suggests that these shares are restricted to something but now you know, they’re restricted to trading for the public.

For example, 
Let's say, the company's promoters, angel investors, VCs and major investors hold 400 shares out of 500 outstanding shares.
  • Free float Shares:

Shares that are available for trading on the stock exchange are known as Free float, Public float or Floating shares. All investors, like retail investors, HNIs, institutional investors etc., who trade in the stock market are holders of these shares.


Outstanding shares – Restricted shares = Free float shares

For example,
500 - 400 = 100; these 100 shares are available for trading on the exchange.

Issued Shares vs Outstanding Shares – Key differences

Issued Shares

Outstanding Shares

Issued shares are a part of Authorized shares

Outstanding shares are a part of Issued shares

Include treasury shares

Don't include treasury shares

Companies' finanical reports don't report issued shares

Financial reports report outstanding shares

We don't use issued shares in the calculation of financial ratios

Calculation of financial ratios include outstanding shares

Issued shares must always be greater than or equal to the amount of outstanding shares 

Outstanding shares must always be lesser than or equal to the amount of issued shares


Outstanding shares are part of Issued shares and the latter is part of Authorized shares. Shares that a company issues to the public out of the authorized shares are known as Issued shares and the issued shares that remain after deducting the treasury shares are known as Outstanding shares.

And the only base of issued shares vs outstanding shares is that the issued shares do includes the treasury shares and the outstanding shares don’t.


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