Authorized Share Capital

  

Remember civics class, when your teacher would drone on about the U.S. constitution? Well, America isn't the only thing with a founding document that lays out its general governing structure. Corporations have the same kind of foundational paperwork.
These docs are called articles of incorporation and they lay out the basic outline of how the company is set up.
One of the items included in these basic documents is the authorized share capital. This designates the amount of stock that a company can create. The term encompasses all the ownership shares that can exist.
The authorized share capital creates the company's pool of stock that can then get distributed as needed. From there, management can issue shares for founders, shares to sell in order to raise capital, shares to make acquisitions or shares to use as stock incentives for employees - basically for any other purpose that seems prudent.

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