Unissued stock is any type of stock that is authorized for issuance by a given corporation, but for some reason has not been released. While valid shares of stock that are accounted for in the charter of the company, the stock remains un-exchanged for money or services of any type. This is in contrast to issued stock, which has been released for sale and is currently in circulation.
All corporations wishing to issue stock at some point will include provisions within their charters that cover this possibility. Included in the details of the charter will be specifics that relate to the maximum number of shares of each class or type of stock the company may issue. The company is not under an obligation to issue the maximum number of shares at any given point in time, nor is it necessary to place all authorized shares in general circulation. Many corporations do choose to hold back a certain number of unissued stock shares for varying reasons.
In some instances, a corporation may choose to hold on to unissued stock while waiting for the demand for the company’s stock offering to grow among investors. Once the demand reaches a certain level, the corporation may choose to release all or a portion of the unissued stock, taking advantage of the higher prices the now desirable stock is commanding. The end result for the company is an infusion of income realized from the sale of additional shares of stock that were not on the open market only a short time ago, without the need to obtain approval from stockholders and board members to issue more shares.
At other times, a corporation may choose to set up a timetable for delivering unissued stock to the open market. When this is the case, the corporation may choose to offer the unissued stock in specific increments over a period of time. This action may be employed when the company wants to use the stock offering as a proactive mechanism to increase interest among investors, rather than releasing unissued stock in response to interest generated by other means.
