Authorized Shares

Authorized shares represent the maximum number of shares of stock that a corporation is legally permitted to issue, as specified in its Certificate of Incorporation (or Articles of Incorporation) filed with the state of incorporation. The authorized share count is a foundational corporate governance decision that affects equity financing capacity, option pool availability, ownership dilution, and — critically for Delaware corporations — franchise tax liability. Typical authorized share counts for venture-backed startups range from 10 million to 15 million shares at incorporation (with 5–8 million issued to founders, 1.5–2.5 million reserved for an employee option pool, and the remainder available for future financing rounds), while mature public companies may authorize hundreds of millions or billions of shares. Increasing authorized shares requires a board resolution and shareholder vote (majority of outstanding shares in most states), followed by an amended Certificate of Incorporation filing — a process that can take 2–6 weeks and cost $1,000–$5,000 in legal fees plus state filing fees. The franchise tax implications of authorized shares in Delaware are particularly significant: the default Authorized Shares Method charges $75 for the first 5,000 shares, $150 for 5,001–10,000, and $75 per additional 10,000 shares — meaning a company with 10 million authorized shares faces a $75,000+ annual tax bill unless it opts for the Assumed Par Value Capital Method. Careful planning of authorized share counts at incorporation — balancing future financing needs against tax exposure — is essential for capital-efficient growth. doola advises founders on optimal authorized share structures and ensures Delaware franchise tax is calculated using the most advantageous method.