Legal Definitions - authorized capital stock

Authorized capital stock refers to the maximum number of shares a corporation can issue to raise capital through the sale of shares. This includes both common and preferred stock. The authorized capital stock can be increased with the consent of the majority of outstanding shareholders.

For example, if a corporation has an authorized capital stock of 1,000,000 shares and has issued 500,000 shares, it can issue an additional 500,000 shares to raise more capital.

Another example is if a corporation wants to expand its operations and needs more capital, it can increase its authorized capital stock to issue more shares and raise the necessary funds.