Why unissued stock matters to a first-time founder
Unissued stock shows how much potential equity remains available under the company’s authorised limit. Issuing it later can fund growth, pay for an acquisition or support employee incentives, but it may dilute existing owners. Founders need board and shareholder approvals, accurate records and enough headroom before promising shares to anyone.
Examples of unissued stock
A company is authorised to issue 1,000,000 ordinary shares and has issued 700,000. The remaining 300,000 are unissued. If it later issues 100,000 to an investor, the unissued balance falls to 200,000 and existing shareholders own a smaller percentage unless they also participate.
Common misunderstanding
Unissued shares are not the same as treasury shares. Unissued shares have never been issued, while treasury shares were issued and later bought back by the company where local law permits. They are also different from reserved shares, which may remain unissued but have been set aside for an option plan or transaction.
When to use it
Use the term when reviewing the cap table, planning a fundraising round or creating an employee option pool. Confirm the authorised, issued, reserved and outstanding figures with the company register and constitutional documents. Company law and approval requirements vary, so obtain legal advice before changing share capital or making an offer.