What is a Capitalization Table?

A capitalization table is a detailed listing of the ownership of a business. At a minimum, it includes the detail for all outstanding common stock and preferred stock, including the names of all shareholders. It may also include a listing of all warrants and stock options that have not yet been exercised. The table is usually formatted in declining order by the size of the investment made in the business, so that the largest investors are stated at the top of the table and the smallest at the bottom. It may also be sorted by type of investment, or by type of investor.

Cap tables are most commonly compiled for early-stage companies that are routinely going out for more equity financing. They distribute the cap table to prospective investors, so that they can gain a greater understanding of the current ownership of the business.

Capitalization Table Best Practices

It is essential for a business to keep its capitalization table up-to-date. Otherwise, new investors could claim that they made investments in the business based on faulty information.