Cap table basics
What is Authorized Shares?
The maximum number of shares a company is legally allowed to issue, as set in its charter - typically 10 million for a Delaware C-corp at incorporation.
Authorized shares are a ceiling, not a count of actual ownership. The Delaware standard at incorporation is 10,000,000 authorized common shares at $0.0001 par value. From there, the company issues shares to founders, reserves shares for the option pool, and leaves a buffer for future rounds. Authorizing more shares later requires a board resolution and a state filing - possible but slow. Most companies size their authorized pool large enough to avoid amending the charter for years.
Example
- 10,000,000 authorized → 6,000,000 issued to founders → 1,500,000 reserved option pool → 2,500,000 unissued buffer.