Harper James advises founders, investors and boards on share ownership, fundraising and shareholder agreements under the laws of England and Wales. A cap table is the working record of who owns what, how ownership changes after investment, and how future share issues affect existing holders.
A well-prepared cap table lists each shareholder, the class and number of shares held, the percentage ownership and any options or other rights to acquire shares. It should also show the position on a fully diluted basis, including an EMI option scheme, growth shares, warrants and an agreed option pool. Keeping issued shares separate from reserved or conditional interests prevents misunderstandings during fundraising and due diligence.
The most useful cap tables model different outcomes rather than showing only the current position. A founder should see the effect of a new investment, an enlarged employee option pool, a convertible instrument or an exit. Read a practical guide to share ownership and cap table management alongside the company’s articles of association and shareholder agreement, since the percentage shown in a spreadsheet does not by itself determine voting rights, transfer restrictions or investor protections.
Before issuing shares, check the company’s articles, shareholder agreement and previous investment documents. Confirm pre-emption rights, investor consent requirements, share class rights and the authority to allot shares. An advance subscription agreement or other convertible instrument needs careful treatment in the model, particularly where its conversion price, discount or valuation cap affects later ownership. SEIS and EIS considerations also need to be addressed at the correct stage.
After completion, update the statutory registers, issue share certificates, record allotments at Companies House where required and reflect the transaction in the next confirmation statement. The cap table should match these records. A mismatch can delay due diligence, create disputes about voting or dividends, and make an exit harder to document.
Assign one owner for the cap table and update it whenever shares are issued, transferred, bought back or placed under an option scheme. Record the transaction date, legal documents, approvals and resulting ownership. Increasingly, scale-ups use dedicated equity-management platforms for version control and scenario planning, but the platform remains a record-keeping tool. Directors still need proper approvals and legally valid documents. A quarterly review with the company secretarial and finance teams keeps the model aligned with the company’s registers, shareholder agreement and board decisions.