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May 13, 2009
Stock Share
Stock Share Types

Just as there are different types of stocks there are also different types of shares. In today's article we provide a list of the different types of shares as well as a definition for each. It is important to have this basic knowledge before investing in the stock market.

Authorized Shares – These shares represent the total number of shares of stock that were authorized when the company was created. The only way the number of authorized shares can increase is if the shareholders vote for the increase. Not all of the authorized shares have to be issued to the public; in fact, many companies retain some shares for later use. These shares are referred to as unissued shares. These companies may later use these shares and often retain a very large percentage of authorized shares in order to ensure that no other companies can seize control of them. They also like to have stock share available for future issue instead of using debt for major expenditures or to buy another company

Unissued Shares – As mentioned above these are those stocks and shares retained by the company in its treasury and they are not issued to the public or to employees.

Restricted Shares – This type of stock share refers to company stock that is used for employee incentives and compensation plans. It is important to note that when a company first goes public there is a waiting period where insiders restricted stock is frozen. Permission of the Securities and Exchange Commission is required by stock holders in order to sell these restricted stock shares. In order to do this, insiders must file a form with the SEC to declare their intention.

Float Shares – These shares are those that are available for trade on the open market. Anyone can participate in buying stocks and shares that are considered to be float shares. If the float of a company is small and the stock attracts attention of investors it can become volatile due to supply and demand imbalances. More buyers drive the stocks up but you must be careful that the stock is no over priced in comparison to its earnings or other fundamentals.

Outstanding Shares – Outstanding shares includes all shares that are issued by a company. This includes float shares as well as restricted shares.

The above provides a quick snapshot of the different stock share types. Continue your stock market education and learn more about trading shares.

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