Listen to a Business English Dialogue About Shares authorized
Charlotte: Hi Harold, have you heard about shares authorized in business and finance?
Harold: Yes, I have. Shares authorized refer to the maximum number of shares a company is legally allowed to issue, as specified in its articles of incorporation or corporate charter.
Charlotte: That’s correct. The number of authorized shares can impact a company’s ability to raise capital, make acquisitions, or issue employee stock options.
Harold: How do companies determine the number of shares authorized?
Charlotte: Companies typically determine the number of authorized shares when they incorporate or amend their corporate charter, taking into account factors such as future growth plans and potential financing needs.
Harold: Can the number of authorized shares be changed?
Charlotte: Yes, companies can amend their articles of incorporation to increase or decrease the number of authorized shares through a vote by shareholders.
Harold: What happens if a company reaches its limit of authorized shares?
Charlotte: If a company reaches its limit of authorized shares, it may need to seek approval from shareholders to increase the authorized share capital through a process called a stock split or a secondary offering.
Harold: Are there any implications for shareholders regarding authorized shares?
Charlotte: Shareholders may monitor the number of authorized shares to assess potential dilution of their ownership stake if the company issues additional shares.
Harold: Thanks for explaining, Charlotte. I have a better understanding of shares authorized now.
Charlotte: No problem, Harold. I’m glad I could help. Let me know if you have any more questions about business and finance topics.