What is the difference between authorized shares and issued shares in Ontario?

Authorized shares are the maximum number (or, in Ontario, an unlimited number if the articles so state) of shares that a corporation is permitted to issue, as set out in its articles of incorporation. Issued shares are the shares that have actually been sold or distributed to shareholders. Issued shares can never exceed the authorized limit.

In Ontario, it is common (and often advisable) for corporations to authorize an unlimited number of shares of each class. This avoids the need to amend the articles every time new shares are to be issued, which would require a formal amendment and shareholder approval. However, having unlimited authorized shares does not mean the corporation has actually issued all of them — the company issues only what it needs.

The distinction matters practically: when shareholders review the ownership of a company, they look at the issued and outstanding shares to determine percentage ownership. When a new investor is brought in or an employee is to receive shares, the corporation issues new shares from the authorized-but-unissued pool (subject to any pre-emption rights other shareholders may hold). Keeping accurate records of authorized, issued, and outstanding shares in the company's minute book is an important part of corporate housekeeping in Ontario.