Unissued Stock Definition
An Unissued stock refers to stock owned by a company but have not been issued or offered for sale in the market. Unissued stock is a class of stock that has been authorized for use in the charter of a company but are yet to be issued.
Unissued stocks do not accumulate dividends, neither are they useful for casting votes during shareholders election.
A Little More on What is Unissued Stock
Unissued Stock should not be confused with treasury stock. Treasury stock refers to a class of shares that had been issued by a company but repurchased by the same company. Unissued stocks on the other hand, are stocks that have not been issued or offered for sale.
The availability of unissued stock afford a company flexibly if stocks are needed to be sold or issued in the future. Also, for shareholders, despite that unissued stock yield no dividend and cannot be used in casting vote, it offers dilution in the value of shares of a company chooses to issue the stocks in future.
Unissued Stock and Treasury Shares
Unissued shares are different from treasury shares which were shares sold and repurchased by the company. Regardless that treasury shares and unissued shares are not the same, some companies classify repurchased shares as unissued shares. Shares that have been authorized for use in a company’s charter but are yet to be issued are unissued shares.
In 2014, Family Dollar Stores filed a 10k with SEC where they stated that “Shares purchased under the share repurchase authorizations are generally held in treasury or are canceled and returned to the status of authorized but unissued shares.” Hence, to calculate the number of unissued stock, the total number of authorized for issuance is deducted from the total amount of shares outstanding, and treasury stock shares.
References for “Unissued Stock”
Academic research for “Unissued Stock”
Corporations: Pre-Emptive Rights of Shareholders in Originally Authorized but Unissued Capital Stock, Trebilcock, E. R. (1941). Corporations: Pre-Emptive Rights of Shareholders in Originally Authorized but Unissued Capital Stock. Michigan Law Review, 40(1), 115-118.
Unissued stock and treasury stock, Walton, S. (1917). Unissued stock and treasury stock. Journal of Accountancy (pre-1986), 23(000006), 455.
Rights of Stockholders as to Unissued Capital Stock, BRADY, J. E. Rights of Stockholders as to Unissued Capital Stock.
Charitable contributions in unissued stock, Shaw, T. T. (1959). Charitable contributions in unissued stock. Journal of Accountancy (pre-1986), 107(000002), 86.
Categorical Confusion: Deal Protection Measures in Stock-for-Stock Merger Agreements, Strine Jr, L. E. (2001). Categorical Confusion: Deal Protection Measures in Stock-for-Stock Merger Agreements. The Business Lawyer, 919-942.
Legal Opinions in Corporate Transactions: The Opinion that Stock is Duly Authorized, Validly Issued, Fully Paid and Nonassessable, FitzGibbon, S., & Glazer, D. W. (1986). Legal Opinions in Corporate Transactions: The Opinion that Stock is Duly Authorized, Validly Issued, Fully Paid and Nonassessable. Wash. & Lee L. Rev., 43, 863.
Uniformity in accounting for treasury stock and its disposition, Rosenfeld, E. (1973). Uniformity in accounting for treasury stock and its disposition. The CPA Journal (pre-1986), 43(000009), 763.
Statutory influence on treasury stock accounting, Buttimer, H. (1960). Statutory influence on treasury stock accounting. The Accounting Review, 35(3), 476.