What is Authorized Shares? Definition, requirements, and how it applies to your business formation. Learn everything about authorized shares for LLCs and corporations.
# Authorized Shares
Authorized shares are the maximum number of stock shares a corporation is legally permitted to issue, as specified in its Articles of Incorporation. A company can issue fewer shares than authorized but cannot issue more without amending its charter (which requires board and shareholder approval).
Startups typically authorize 10 million shares at incorporation — enough to accommodate founders, employees (option pool), and multiple funding rounds without needing charter amendments. Delaware's franchise tax under the Authorized Shares Method increases with the number of authorized shares.
Lovie's C-Corp formation defaults to 10 million authorized shares (the standard for VC-backed startups) and uses the Assumed Par Value Method to minimize Delaware franchise tax.