What is a cap table and how do I keep one?

What does a cap table show?

A cap table lists every security and every right to get one. A founder-stage cap table usually has:

• each shareholder, their share class and number of shares;
• options granted and the shares still available in the option pool;
• SAFEs and convertible notes, with their amounts, valuation caps and discounts;
• warrants or other rights to acquire shares;
• percentages on an issued basis and on a fully diluted basis.

What does fully diluted mean?

It counts every share that exists or could exist from outstanding rights. Options, the unallocated pool and convertible instruments are treated as if they had become shares. Investors price rounds on a fully diluted basis, so this is the number that matters when you negotiate.

	Issued basis	Fully diluted basis
Founder A (4,500,000 shares)	50%	45%
Founder B (4,500,000 shares)	50%	45%
Option pool (1,000,000 reserved)	not counted	10%

SAFEs don’t have a share count until they convert, so founders model them at different round prices. See what is dilution?

Is the cap table a legal document?

Not by itself. The legal record is the securities register kept under section 141 of Ontario’s Business Corporations Act or section 50 of the CBCA, backed by signed subscriptions and directors’ resolutions in the minute book. If the spreadsheet and the register disagree, investors will ask which one is right, and the answer is usually whichever has the signed paperwork.

When should I update it?

Every time something changes:

• shares issued, transferred, repurchased or cancelled (including a founder buyback);
• options granted, exercised, expired or forfeited;
• SAFEs or notes signed or converted;
• a share split or a new class.

Each change should come with a board approval, an update to the securities register and, if anyone’s stake crosses 25%, the significant control register. Securities issued under some exemptions also need a filing with the OSC within 10 days, under section 6.1 of National Instrument 45-106.

Spreadsheet or software?

Either works early. A spreadsheet is fine for a few founders and a handful of SAFEs. Cap table software helps once you have an option plan with many grants and vesting schedules. Whatever you use, reconcile it to the register before a round.

What do investors check?

That every line is backed by a signed document and a resolution, that the numbers reconcile, that convertible instruments are modelled correctly, and that earlier securities filings were made. See what do investors check in due diligence?

Our investor due diligence prep reviews the cap table against your records and lists the gaps, starting at $1,480. See fees.

This guide is general information about Ontario and Canadian law, not legal advice for your situation. To get your cap table investor-ready, book a free 15-minute consult.