Capitalisation Table(Cap table)
A Capitalisation Table, commonly referred to as a Cap table, is a financial tool used to outline the ownership structure and capitalisation of a company. It provides a snapshot of the equity ownership distribution among various stakeholders, such as founders, investors, employees, and other shareholders. The Cap table displays the percentage of ownership, types of securities issued, and any changes in ownership over time.
The Cap table typically includes the following information:
- Shareholders: It lists the names of all shareholders and their respective ownership percentages in the company. This includes founders, investors, employees with equity grants, and others who hold shares.
- Securities: It details the different types of securities issued by the company, such as common shares, preferred shares, stock options, or convertible notes. Each security type may have different rights, privileges, and restrictions associated with them.
- Ownership and Dilution: The Cap table illustrates the ownership stakes of each shareholder, both on a fully diluted basis and as per the current issued and outstanding shares. It helps determine the impact of future equity issuances or financing rounds on the ownership percentages of existing shareholders, highlighting any dilution that may occur.
- Transactions: The Cap table tracks any significant transactions that affect ownership, such as equity issuances, stock options grants, conversions, or transfers of shares. It documents the date, type, and quantity of securities involved in each transaction.
- Valuation and Financing Rounds: The Cap table may also include details of the company's valuation at different financing rounds, providing insights into the company's growth trajectory and funding history.
The Cap table is an important tool for company management, investors, and stakeholders as it helps in decision-making related to equity issuances, fundraising, mergers, acquisitions, and exits. It provides transparency and clarity regarding ownership and helps in evaluating the impact of various scenarios on equity distribution.
Maintaining an accurate and up-to-date Cap table is crucial for effective corporate governance and investor relations. It is typically managed using specialised software or spreadsheets that allow for easy tracking and analysis of ownership changes over time.
