Treasury Stock

Every company has an authorized amount of stock it can issue legally. Of this amount, the total
number of shares owned by investors, including the company's officers and insiders (the owners
of restricted stock), is known as the shares outstanding. The number available only to the public
to buy and sell is known as the float.
Treasury stocks are shares that were once a part of the float and shares outstanding but were
subsequently repurchased by the company and decommissioned. These stocks do not have voting
rights and do not pay any distributions. A company can decide to hold onto treasury stocks
indefinitely, reissue them to the public, or even cancel them.

Common Stock
Common stock is a security that represents ownership in a corporation. Holders of common
stock exercise control by electing a board of directors and voting on corporate policy. Common
stockholders are on the bottom of the priority ladder for ownership structure; in the event
of liquidation, common shareholders have rights to a company's assets only after bondholders,
preferred shareholders and other debtholders are paid in full.

Capital stock and treasury stock describe two different types of a company's shares. Capital stock
is the total amount of shares a company is authorized to issue, while treasury stock is the amount
of shares a company holds in its treasury.
Capital stock consists of a company's common and preferred shares that it is authorized to issue
based on the company's corporate charter. The corporate charter is a legal document and
indicates the maximum amount a company is allowed to issue. Investors who own common and
preferred shares may have benefits, such as receiving dividends and having voting rights.
For example, company ABC issued 100 million shares of common stock and was only able to
sell 70 million of those shares. In addition, it issued 20 million shares of preferred stock and was
only able to sell 5 million of those shares. Therefore, company ABC has 30 million (100 million
- 70 million) common shares and 15 million (20 million - 5 million) preferred shares in its
treasury.