Authorized, But Unissued

This setting will have a big impact on the ownership percentages of everyone on your cap table.

Authorized, But Unissued Are Not Included In Fully Diluted

This is the default setting, and the most common. If you've authorized a large block of shares, but only issued a fraction of them, the difference will not be allocated a percentage of your company capitalization until those shares are issued.

For example:

5,000,000 common shares are authorized for Acme Company. 2,000,000 have been issued to two founders, leaving 3,000,000 at authorized, but unissued.

In this scenario, each founder would have 50% of the company as they each have 1mm shares out of the 2mm shares outstanding.

Authorized, But Unissued Are Included In Fully Diluted

This is rare, but some companies want authorized but unissued shares on the cap table. The difference between authorized and issued will be allocated a percentage of your company capitalization until those shares are issued.

For example:

5,000,000 common shares are authorized for Acme Company. 2,000,000 have been issued to two founders, leaving 3,000,000 at authorized, but unissued.

In this scenario, each founder would have only 20% of the company as they each have 1mm shares out of the 5mm shares outstanding (which is made up of 2mm issued shares + 3mm authorized but unissued shares).