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The number of authorized shares is typically higher than those actually issued, which allows the company to offer and sell more shares in the future if it needs to raise additional funds.
The number of authorized shares can be increased by the shareholders of the company at annual shareholder meetings, provided a majority of the current shareholders vote for the change.
So with a 2-for-1 stock split, each stockholder receives an additional share for each share held, but the value of each share is reduced by half. This means two shares now equal the original value of one share before the split.
the number of authorized shares is important to the market value of a stock. The issuance and sale of new stock, forward splits and stock dividends all increase the number of issued and outstanding shares and dilute stockholders percentage ownership. More shares lower the market price per share.
If company management wants to increase the number of authorized shares, it must obtain the approval of the shareholders via a formal vote. Stock splits affect only the issued and outstanding stock -- the authorized shares dont split.

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The split increases the number of shares outstanding, but the companys overall value does not change. Immediately following the split the share price will proportionately adjust downward to reflect the companys market capitalization.
Stock splits divide a companys shares into more shares, which in turn lowers a shares price and increases the number of shares available. For existing shareholders of that companys stock, this means that theyll receive additional shares for every one share that they already hold.
In the example of a 2-for-1 split, the share price will be halved. Thus, while a stock split increases the number of outstanding shares and proportionally lowers the share price, the companys market capitalization remains unchanged.
The most common split ratios are 2-for-1 or 3-for-1, which means every single share before the split will turn into multiple shares after the split. A company elects to perform a stock split to intentionally lower the price of a single share, making the companys stock more affordable without losing value.
Authorized share capital is set by the shareholders and can only be increased with their approval.

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