A capitalization table, commonly called a cap table, is a summary of the ownership interests in a company. It commonly identifies equity holders, classes of ownership, the number of shares or units held, and the percentage of the company represented by those interests.

An LLC may benefit from maintaining an ownership table even when its operating agreement does not use the term cap table. The table may track membership units, percentage interests, capital interests, profits interests, voting rights, contributions, and other economic rights.

A basic ownership percentage is calculated by dividing the number of outstanding shares or units held by an owner by the total outstanding shares or units. More complex calculations may be required when the company has different classes, conversion rights, options, warrants, or different economic rights.

Fully diluted ownership generally assumes that outstanding options, warrants, convertible securities, and other rights to acquire equity have been exercised or converted. The precise definition may vary by transaction and governing document.

When new equity is issued, the total number of outstanding interests increases. Unless an existing owner also acquires additional interests, the owner’s percentage of the expanded total ordinarily decreases.

Authorized shares are the maximum shares a corporation is authorized to issue under its formation documents. Issued shares are shares that the corporation has actually issued. Outstanding shares generally exclude shares that have been repurchased or otherwise cease to remain outstanding.

Options and warrants are commonly shown separately from currently outstanding equity. They are often included when calculating fully diluted ownership because they may become outstanding shares or units if exercised.

SAFEs and convertible notes may be listed as potential future equity even before conversion. The resulting number of shares may depend on valuation caps, discounts, accrued interest, financing terms, and other contractual provisions.

A cap table may provide evidence of how the company understands its ownership, but it does not necessarily create ownership by itself. Actual rights may depend on formation documents, governing agreements, resolutions, subscription agreements, grants, certificates, transfer instruments, and applicable law.

No. A cap table is generally a practical ownership summary. A stock ledger or membership ledger may be a more formal company record that tracks issuances, transfers, cancellations, certificate information, and the chain of ownership.

Responsibility varies by company. A founder, officer, manager, attorney, accountant, equity administrator, or financial professional may maintain the table. The company should establish a reliable process for recording each ownership transaction and reconciling the table against source documents.

A cap table should generally be updated promptly after any issuance, transfer, grant, exercise, conversion, forfeiture, redemption, repurchase, recapitalization, or other transaction affecting ownership or potential ownership.

Yes. Different equity classes may have different voting rights, distribution rights, conversion rights, preferences, or liquidation rights. This is particularly important for LLCs and companies with preferred equity.

An inaccurate cap table can create disputes, delay financing or acquisitions, interfere with tax and accounting work, and create uncertainty regarding voting, distributions, and sale proceeds. The company should compare the table against its governing and transaction documents and address discrepancies promptly.

No. This tool provides general calculations based only on the information entered. It does not interpret governing documents, determine legal ownership, calculate tax basis, maintain capital accounts, value securities, or resolve inconsistencies in company records.