True or false: The number of authorized shares can be significantly higher than the issued shares.

True or false: The number of authorized shares can be significantly higher than the issued shares.

• A. It must always be equal
• B. True
• C. False
• D. It is never higher

Answer: (B)

Authorized shares set the maximum number a company can issue, while issued shares are the actual shares that have been sold or granted. It's common for the authorized count to be higher than the issued count, sometimes by a large margin, to keep flexibility for future fundraising, employee stock options, or acquisitions. Issuing more shares beyond what’s already issued would typically require adjusting the charter to raise the authorized limit, often with shareholder approval. So the statement is true.

Authorized shares set the maximum number a company can issue, while issued shares are the actual shares that have been sold or granted. It's common for the authorized count to be higher than the issued count, sometimes by a large margin, to keep flexibility for future fundraising, employee stock options, or acquisitions. Issuing more shares beyond what’s already issued would typically require adjusting the charter to raise the authorized limit, often with shareholder approval. So the statement is true.