Glossary
Cap Table
A cap table (capitalization table) is a detailed ledger that outlines the ownership structure of a company, listing shareholders, the types and number of shares they hold, and their percentage ownership. It is essential for tracking equity distribution, dilution, and financing rounds.
A cap table (capitalization table) is a detailed ledger that outlines the ownership structure of a company, listing shareholders, the types and number of shares they hold, and their percentage ownership. It is essential for tracking equity distribution, dilution, and financing rounds. Legal Functions of a Cap Table:
- Ownership Transparency: Clearly defines who owns what percentage of the company, essential for decision-making and governance.
- Investor and Founder Rights: Helps enforce shareholder agreements, voting rights, and liquidation preferences.
- Fundraising and Valuation: Used by investors to assess dilution impact, company valuation, and equity stakes in financing rounds.
- Regulatory Compliance: Ensures proper documentation for tax filings, securities regulations, and corporate law compliance.
- M&A and Exit Planning: Provides clarity in acquisitions, IPOs, or secondary sales by outlining ownership stakes and rights. Cap tables evolve as companies raise capital, issue new shares, or grant stock options, making accurate record-keeping crucial for corporate governance and investor relations.