What is a capitalization table and why keep it up to date?

What is a capitalization table?

A capitalization table, often called a cap table in the start-up ecosystem, is the reference document that records all the holders of a company's financial securities and the share of capital they own. Its function is simple to state but essential to master: it answers the question who owns what, and in what proportion?

Beyond this snapshot of the shareholding, the cap table is a strategic steering tool. In particular, it makes it possible to anticipate and manage the risk of dilution, that is, the reduction of each shareholder's relative share as new securities are issued. For it to fulfil this role, several record-keeping rules must be observed.

In concrete terms, a capitalization table lists all the instruments granting access to the company's share capital. It includes:

• The number and percentage of shares held by each shareholder
• The list of investors (founders, business angels, venture capital funds)
• The securities granting access to capital: BSPCE (founder share warrants), BSA (share subscription warrants), BSA AIR, convertible bonds, stock options, etc.
• The history of the transactions that have changed the capital structure

From incorporation to the first fundraising rounds

The cap table begins as soon as the company is incorporated, with the distribution of the initial capital among the co-founders. At this stage, the partners choose a number of shares representing the starting capital, their par value, and how they are split among themselves. Each line of the register corresponds to one shareholder, and the total of the percentages must always add up to exactly one hundred percent.

When the company carries out its first fundraising through a capital increase, commonly known as a funding round, the founders open their capital to new entrants. New shares are issued in exchange for the amounts invested, which mechanically changes the distribution. Every transaction of this kind must always be recorded in the capitalization table.

It should also be recalled that shareholders have a right to information: they may consult at any time a great deal of data relating to the company in which they hold a share of the capital. A reliable and accessible cap table is therefore also a guarantee of good governance.

Representing the capitalization table simply

A good cap table always distinguishes two levels of reading:

• Non-diluted capital: only the share capital actually issued at a given moment
• Fully diluted capital: the share capital increased by all the issued instruments intended to convert into shares in the future (BSPCE, BSA, convertible bonds, etc.)

This dual view offers a clear representation of how the company's financial structure evolves and of the future impact of instruments already issued, even when they have not yet been exercised or subscribed.

In practical terms, the columns of a cap table generally include:

• The type of financial security held
• The number of securities per shareholder
• The corresponding percentage
• The distribution before and after dilution

When a shareholder holds several categories of securities, they all appear on a single line, which allows an immediate reading of their overall position.

In their early days, most companies set up their capitalization table on a simple spreadsheet, as the structures are still relatively simple. But this approach quickly shows its limits: as funding rounds multiply and instruments such as BSPCE are issued to retain employees and align their interests, complexity increases and the risks of error, omission or desynchronization become considerable.

Why is it important to keep your capitalization table up to date?

The cap table is not a static document: it accompanies the company throughout its life and must be updated at every capital event. A neglected cap table can lead to disputes between partners, delay a fundraising, or even jeopardize a sale transaction. Conversely, a rigorously maintained cap table is a genuine strategic asset.

Recording every fundraising and every exit from the capital

The capitalization table is the living reflection of your shareholding structure. You must be able to know, at any time and without ambiguity, who holds your company's securities.

This requirement becomes critical when the following multiply:

• The types of financial instruments: shares, BSA, BSA AIR, BSPCE, convertible bonds
• The types of transactions: fundraisings, option conversions, securities transfers, exercise of warrants

This is precisely where a technological solution makes the difference. Equisafe offers the tokenization of financial securities on EVM-compatible blockchains: each security is represented by a token recorded in a distributed ledger, which makes transactions tamper-proof, immutable and timestamped. The classic problem of reconciling different documents disappears, since the capitalization table and the securities movement register (registre de mouvements de titres) derive from a single source of truth that can be consulted in real time.

This approach offers several concrete advantages:

• Institutional-grade security: data integrity is guaranteed by the blockchain
• Regulatory compliance: Equisafe operates within a framework compliant with the requirements of the AMF (French financial markets authority) and the European MiCA regulation
• Cost reduction: automated updating greatly reduces the systematic need for a lawyer to update these registers
• Full traceability: every transaction is recorded in an auditable manner

Transparency to attract new investors

Potential investors will systematically ask to consult your cap table before committing. Knowing who holds what, in what proportion and at what valuation gives them the visibility essential to their decision.

Yet some financial instruments, such as BSPCE, BSA, BSA AIR or convertible bonds, are not registered with the Commercial Court registry (Greffe du tribunal de commerce). Investors must then rely on the information provided by the founders. A cap table that is approximate or whose reliability cannot be demonstrated immediately undermines trust.

A capitalization table and a securities movement register updated in real time, without any reconciliation problem, bring decisive transparency for both current and future investors. As part of a due diligence, one or more investors may request an audit of these registers. With a traditional solution, this exercise is often complex and time-consuming. With a tokenized and immutable register, the audit becomes almost instantaneous: the proof of each transaction is recorded in a tamper-proof manner on the blockchain.

How do you reconcile a capitalization table?

The capitalization table and the securities movement register must be amended after each new transaction. Under the classic process, once the contracts have been signed and the amounts paid into the company's bank account, the chairman must manually update these registers and then make them available to the shareholders. This manual step is the main source of errors and discrepancies between documents.

Securities tokenization solves this problem at its root. When a transaction is executed on the platform:

• The issuance, subscription or transfer is recorded directly in the distributed ledger
• The capitalization table updates automatically, with no manual reconciliation
• All stakeholders access a consistent and permanently synchronized view

There is no longer a local version that differs from the official one, no more forgotten file or erroneous dilution calculation. The cap table stops being a document to maintain and becomes the automatic and reliable reflection of your company's capital reality.

In summary

The capitalization table is much more than a simple table: it is the backbone of your company's governance and financing. Keeping it up to date with rigour is essential to manage dilution, build trust with your investors and accelerate your transactions. By relying on securities tokenization and a framework compliant with the requirements of the AMF and the MiCA regulation, Equisafe turns this administrative constraint into a strategic advantage, by offering a cap table that is secure, transparent and always up to date.