Authorized shares are the total number a company's certificate of incorporation permits it to issue. Issued shares are the portion actually granted to someone. Outstanding shares are issued shares still held by shareholders, excluding any the company has bought back.
A company might authorize 10 million shares at formation but only issue 6 million to founders and early hires, keeping the remaining 4 million available for an option pool and future investors without needing to amend its certificate of incorporation every time it grants equity.
This distinction matters directly for Delaware franchise tax, since one of the two calculation methods is based specifically on the authorized share count, not the issued or outstanding count. A company that authorizes far more shares than it actually plans to use anytime soon can end up with a larger tax bill than necessary under that method.
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