When you are planning on offering ownership of your company through company shares (either public or private), you will need to have a capitalization table (often referred to as a “cap table”) to show exactly who owns what and how much of your company. Tracking of this cap table is critical to the success of your company. Learn what cap table tracking is and the importance of this type of tracking below.
What Does Cap Table Tracking Do?
Cap table tracking is the process of tracking and managing the ownership of a company’s shares. This type of tracking is a crucial aspect of equity management because it shows exactly who owns what parts of a company and how much of that company. This table breaks down different classes of equities (such as common stocks versus preferred stocks) and shows who owns what and how much. Such tracking is important to know how much of a company specific shareholders own and what specific rights (such as voting rights) they have from owning a specific number and type(s) of shares.
Why is This Type of Tracking Important?
This type of tracking is important because people interested in investing in your company will know exactly how many people have already invested in your company, as well as what types and number of shares and other equity ownership securities have been issued. This also helps potential investors evaluate the risk of investing in your company. You and your staff will also find this tracking important because it will help you to decide whether you should issue more shares and what types of shares to raise future funding capital.
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