What is a Cap Table?

A cap table, short for “capitalization table”, is a document that provides an overview of a company’s equity ownership structure. It lists all the company’s securities, such as ordinary shares, preferred shares, options, warrants, and other equity instruments, along with the ownership percentages and the names of the individuals or entities that hold these securities.

Here are some key elements typically included in a cap table:

• Shareholders: The names of the individuals, institutions, or entities that hold shares in the company. This includes founders, investors, employees, and anyone else who has an ownership stake.
• Share classes: A breakdown of the different types of securities issued by the company, such as common stock, preferred stock, convertible notes, and stock options.
• Number of Shares: The total number of shares issued for each share classes.
• Date and Price of Issue of Shares: Details of what shares where issued on what date and at what price. This helps to illustrate the increase (or decrease) in the price per share as the company grows and develops its business.
• Ownership Percentage: The percentage of ownership that each shareholder holds in the company. This is usually calculated based on the number of shares they own relative to the total outstanding shares.
• Option Grants: Information on share options granted to employees, including the strike price and vesting schedule.

A cap table is a critical tool for founders, investors, and company management to understand the ownership structure, equity distribution, and potential dilution of ownership over time. It plays a crucial role in fundraising, mergers and acquisitions, and other corporate transactions, as it helps stakeholders assess the impact of new investments or changes in ownership on existing shareholders.

As a company evolves and raises additional funding rounds or issues new equity incentives to employees, the cap table may need to be updated regularly to reflect these changes accurately. Proper management and maintenance of the cap table are essential for transparency and effective corporate governance.

How to get started with your business company’s Cap Table

ProSec can provide you with a Cap Table that is easy to use and update to reflect any future fundraisings or changes to the capital structure. The Cap Table will be provided in Excel format that you can then share with your shareholders or potential investors.

If this is something you need, please contact us and we would be happy to help you.