What Is a Cap Table? The UK Founder's Guide

A cap table - short for capitalisation table - is a record of every person and entity that holds equity in your company. It shows who owns shares, how many they own, what type of shares they hold, and what percentage of the company that represents.

If someone asks "who owns this business?", your cap table is the answer.

For a company with two founders and no outside investment, a cap table might be just two lines on a spreadsheet. For a startup that's raised a couple of rounds, hired a team with share options, and brought on advisors, it becomes a living document that changes every time equity moves.

Either way, the cap table is the foundation that every equity decision sits on. Issue shares to a co-founder? That's a cap table event. Raise money from an angel investor? Cap table event. Grant options to your first engineer? Cap table event. If you're building a UK startup, you'll interact with your cap table more often than almost any other business record - and getting it wrong can cost you months of legal fees when you're least able to afford them.

Cap table vs. register of members: the UK distinction that matters

Most guides treat the cap table as though it's one thing. In the UK, it's actually two things working in parallel — and confusing them is one of the most common early mistakes founders make.

Your register of members is a statutory requirement under the Companies Act 2006. Every UK limited company must maintain one. It records the names and addresses of everyone who holds shares in the company, along with the date they became (and, if applicable, ceased to be) a member. It's a legal document which must be preserved for 10 years. If your register doesn't match what's filed at Companies House, you have a compliance problem.

Your cap table is a management tool that sits on top of the register of members. It includes everything in the statutory register, but it also shows things the register doesn't: the percentage each shareholder owns, how that ownership has changed over time, the price paid per share in each round, any option pools you've created, and a "fully diluted" view that accounts for shares that haven't been issued yet but could be in future (like options waiting to vest).

Think of it this way: the register of members is what the law requires. The cap table is what you actually need to run your company.

In practice, good cap table software keeps both in sync. But it's worth understanding the distinction early because investors, lawyers, and HMRC each care about different parts of this picture — and you need to know which document to hand them.

What belongs on a cap table

At its simplest, a cap table answers four questions about every stakeholder in your company:

Who are they? The full name of every shareholder — founders, co-founders, investors, employees with exercised options, and anyone else holding shares.

What do they hold? The number of shares and the type (or "class") of shares. A typical early-stage UK company might have a single class of ordinary shares. After a funding round, you'll likely also have a second class - perhaps SEIS Ordinary Shares or Series A Preferred Shares - each with different rights attached.

How much did they pay? The price per share at the point of issue or transfer. This matters for calculating valuations, modelling dilution, and for tax purposes (especially when options are involved).

What percentage do they own? This is the number everyone focuses on, and it comes in two flavours. "Issued" ownership shows the percentage based only on shares that actually exist today. "Fully diluted" ownership includes shares that don't yet exist but probably will - like unvested options in your employee share pool. Most investors think in fully diluted terms, so your cap table should show both.

Beyond these basics, a well-maintained cap table also records vesting schedules for share options, details of any convertible instruments (like a convertible loan note or an advanced subscription agreement) that could turn into shares later, and the dates of key events - because the order in which things happened matters when it comes to tax, SEIS/EIS eligibility, and filing requirements.

The life of a UK cap table: four stages

The best way to understand a cap table is to watch one grow. Here's how a typical UK startup's cap table evolves from day one through its first funding round - and what you need to file at Companies House at each step.

Stage 1: Incorporation

You register a limited company. On the IN01 incorporation form, you declare a Statement of Capital that says how many shares you're creating, their nominal value, and who the initial subscriber is.

Most founders incorporate with a simple structure: 100 ordinary shares at £0.01 nominal value each, all issued to a single subscriber - you.

Your cap table at this point is one line:

Total issued: 100 shares. Nominal value: £0.01/share. Share classes: 1.

It's the simplest cap table possible, and it already exists as a legal record: the IN01 you filed with Companies House is the first version of your register of members.

A note on nominal value: The nominal value (sometimes called "par value") is the minimum legal price of a share. It has almost nothing to do with what your company is actually worth. A £0.01 nominal value is standard for UK startups because it gives you the flexibility to issue shares at whatever price the market will bear later - the actual price per share during a funding round will be far higher than £0.01, and the difference between the nominal value and the price paid goes on your balance sheet as "share premium."

Stage 2: Co-founder equity split

You bring on a co-founder. Before issuing them shares, you'll almost certainly want to do a share split - subdividing your 100 shares into, say, 10,000 shares. This doesn't change your ownership or the value of the company. It just gives you more granularity to divide equity without dealing in fractions.

Then you issue 4,000 new ordinary shares to your co-founder, giving them roughly 28.6% of the company.

Total issued: 14,000 shares. Nominal value: £0.001/share (post-split). Share classes: 1.

This is the first time your cap table changes after incorporation, and it triggers two things you need to deal with at Companies House:

1. SH02 form - the "notice of subdivision of shares." You file this within one month of your share spit. It tells Companies House how many shares were created in the share split.

2. SH01 form - the "return of allotment of shares." You file this within one month of issuing the new shares to your co-founder. It tells Companies House how many shares were created, what class they are, and the new Statement of Capital.

   
   

Why this matters: If you skip the SH01 or SH02, or get the details wrong, your Companies House record won't match your actual cap table. That mismatch becomes a problem the moment an investor runs due diligence on your company - and it's significantly cheaper to get right the first time than to fix later.

This is also the point where you should think about a vesting schedule for your co-founder's shares. If they leave after six months, do they keep all 28.6%? Anyone who's been through the startup journey will tell you that it's a marathon, and the rewards from an exit should go to the individuals who were there for the duration (or for large parts of it).

That's why founders protect themselves by attaching reverse vesting to co-founder shares - typically a four-year vesting period with a one-year cliff. This doesn't appear on Companies House (the shares are legally issued immediately), but it should absolutely appear on your cap table, because it affects the real ownership picture.

Stage 3: Angel round

Your company is gaining traction and you raise £150,000 from three angel investors, each putting in £50,000 at a £1,000,000 pre-money valuation. This means each angel receives shares priced at about £8.82 per share (vastly more than the £0.001 nominal value), and collectively the three investors own around 13% of the post-money company.

For SEIS tax relief eligibility (which gives your investors up to 50% income tax relief on their investment), you'll typically create a new share class - often called "SEIS Ordinary Shares" - which carries the same economic rights as ordinary shares but is identifiable as SEIS-qualifying.

Total issued: 17,000 shares. Share classes: 2.
Pre-money valuation: £1m. Post-money valuation: £1.15m.

Several things just happened to your cap table:

Dilution. You and your co-founder still hold the same number of shares, but your ownership percentages dropped. You went from 71.4% to 58.8%. This isn't bad - your 58.8% of a £1.15m company is worth more than your 71.4% of a company with £0 in the bank. But it's the first time you'll feel the arithmetic of dilution, and it's worth getting comfortable with it now.

A new share class. Your cap table now has two types of shares. Each class may have different rights attached (for example, SEIS shares often come with certain protective provisions in the articles of association). Your cap table needs to track each class separately.

More Companies House filings. When you created the new SEIS share class you will have amended your company articles and passed a special shareholder resolution approving the new articles. Both the signed resolution and the articles need to be sent to Companies House within 15 days. And you'll need to submit another SH01 for the new share allotment. Typically both filings would be handled by the lawyer who drafted your fundraising documents.

SEIS compliance. If your angels are claiming SEIS relief, you'll need SEIS Advance Assurance from HMRC (ideally obtained before the round) and you'll later file a compliance statement (SEIS1) with HMRC and issue EIS3/SEIS3 certificates to investors. None of this appears on the cap table directly, but the share class labelling on your cap table is what connects the dots between the legal record and the tax record.

Stage 4: Option pool

You're hiring your first employees and want to offer equity as part of their compensation. You set up an EMI (Enterprise Management Incentive) share option scheme and reserve a pool of options equal to about 10% of the fully diluted share count.

The key word here is "fully diluted." You're not issuing new shares yet - you're making a promise that up to 1,889 new shares could be created in future when employees exercise their options. This changes the denominator in the ownership calculation.

Fully diluted total: 18,889. Issued shares: 17,000. Options reserved: 1,889.

This is where the distinction between "issued" and "fully diluted" becomes real. On an issued basis, nothing has changed - the five shareholders still hold exactly the shares they held before. But on a fully diluted basis, everyone's percentage has dropped because the denominator now includes the option pool.

Most investors evaluate your company on a fully diluted basis. When a VC says "the founders own 53%," they're usually looking at the fully diluted number, not the issued number. Your cap table should always make both views available.

Two ways to read your cap table: issued vs. fully diluted

By Stage 4 above, the difference between "issued" and "fully diluted" starts mattering for real decisions. Here's a clear way to think about it:

Issued (or "basic") view: Only counts shares that have actually been created and are legally held by someone right now. This is the number that matches your Companies House filings and your register of members. It's the legally accurate picture.

Fully diluted view: Counts everything that could become a share - issued shares, plus all outstanding options (vested and unvested), plus any convertible instruments (like convertible loan notes) that will convert into shares at the next funding round. This is the commercially relevant picture, because it shows the real ownership anyone should expect if every instrument converts and every option is exercised.

Neither view is "right" - they serve different purposes. Your accountant probably cares about the issued view. Your investors almost certainly care about the fully diluted view. You need to understand both.

Common UK cap table mistakes (and how to avoid them)

Cap table problems are rarely dramatic in the moment. They compound quietly, then surface at the worst possible time —- usually when you're trying to close a funding round and an investor's lawyer is asking questions you can't answer.

Not doing a share split before issuing equity. If you incorporated with 100 shares and want to give a co-founder 30%, you'd need to issue 42.86 shares. Fractions of shares don't exist. Do a share split early - 10,000 or even 100,000 shares gives you the flexibility to divide ownership cleanly and create a sensibly-sized option pool later.

Forgetting to file the SH01. Every time you allot new shares, you have 1 month to file an SH01 at Companies House. Miss it and your public record doesn't match your actual cap table. This is the single most common filing mistake we see, and it becomes exponentially harder to fix the longer you leave it.

Giving away equity without vesting. Issuing shares outright to a co-founder, early employee, or advisor with no vesting schedule creates "dead equity" risk. If they leave after three months with 20% of your company and no obligation to return it, you'll be explaining that red flag to every future investor. You'll also be giving them a big chunk of your exit proceeds that they didn't really deserve. Use vesting schedules for all co-founder and employee awards - and in fact anyone else who is "earning" their equity rather than paying for it (e.g. advisers).

Treating the cap table and the statutory register as separate systems. If your internal cap table says one thing and Companies House says another, you have a mess that only a lawyer can unpick. Every cap table event should trigger the corresponding Companies House filing. One system, one truth.

Ignoring the fully diluted view. Founders who only look at issued percentages get a nasty surprise when they realise their option pool, convertible notes, and advisor warrants add up to 25% dilution they hadn't mentally accounted for. Always model the fully diluted picture.

Creating too many share classes too early. Every new share class adds complexity to your articles of association and your cap table. Some early-stage companies end up with four or five classes before they've raised a proper round - advisor shares, family shares, SEIS shares, ordinary shares, each with slightly different rights. These all add time (and hence cost) to the legal work for future rounds. Try to keep it simple: one ordinary class for founders, a second class when you raise your first SEIS/EIS round, and options under a single scheme for employees.

When to move from a spreadsheet to software

A spreadsheet is fine on day one. Two founders, one share class, no options - you can track that in a Google Sheet without breaking a sweat.

But spreadsheets fail predictably at three inflection points:

When you do your first funding round. Multiple investors, a new share class, dilution maths, possibly a convertible instrument converting - a spreadsheet formula can handle this, but one broken cell and your entire ownership picture is wrong. And you won't know it's wrong until someone else finds the error.

When you set up an option scheme. Options involve grant dates, exercise prices, vesting schedules, cliff periods, and the ongoing tracking of who has vested how many options at any point in time. A spreadsheet that started as three columns is now a twelve-tab monster that only one person understands. The same applies to other forms of employee incentives like growth shares.

When you have more than one person who needs to see the cap table. Investors asking for an up-to-date ownership summary. Your accountant needing the data for year-end. Your lawyer checking dilution before a new round. A shared spreadsheet with version control issues is a liability, not a tool. With proper cap management software, those people can simply use their own log in to pull up-to-date data for themselves.

The transition point isn't about company size - it's about how many moving parts your equity structure has. Once you have more than one share class or more than a handful of stakeholders, a purpose-built cap table platform saves you time, reduces the risk of errors, and keeps your statutory records in sync automatically.

Your cap table is a compliance artefact, too

Most cap table guides stop at strategy: how to split equity, how dilution works, what investors want to see. That's important, but it's only half the picture for a UK founder.

Every change to your cap table triggers a compliance obligation. Issue shares? File an SH01. Transfer shares? Update the register and the confirmation statement. Bring on a significant shareholder? Check the PSC register. Grant EMI options? File with HMRC. Create a new share class? Amend your articles.

In the UK, your cap table isn't just a management tool - it's the engine that drives a chain of legal filings. If you treat the cap table and your statutory obligations as separate workflows, they'll drift apart. And when they drift apart, the cost of bringing them back into alignment grows with every month that passes.

The best approach is to use a system where updating your cap table automatically accounts for the filings that need to follow. Not every platform does this - most equity management tools handle the strategic layer (modelling, scenario planning, investor views) but leave you to figure out Companies House on your own.

Quick-start checklist for your first cap table

If you're incorporating a company or have recently done so and want to get your cap table right from the start, here's the sequence:

At incorporation: Record your subscriber shares - the number, class, nominal value, and the subscriber's details. This information is on your IN01. You now have a cap table.

Before issuing equity to anyone: Do a share split to give yourself enough shares to divide cleanly. 10,000 is a common starting point. File the appropriate form at Companies House (an SH02).

When bringing on a co-founder: If the company still has minimal value then issue shares, not options, with a reverse vesting schedule baked into your articles of association or a separate vesting agreement. File the SH01 within 1 month.

Before your first funding round: Make sure your cap table is clean and matches Companies House exactly. Get SEIS/EIS Advance Assurance if applicable. Model the dilution. Know what your fully diluted picture looks like before you negotiate terms.

When hiring with equity: Set up a formal option scheme (EMI if you qualify - most early UK startups do; if not, explore CSOPS or growth shares). Get an HMRC-agreed valuation. Create an option pool (10–15% of the fully diluted total is common). Track every grant, every vesting event, and every exercise on the cap table.

Ongoing: Every time the cap table changes, check: does this event require a Companies House filing? Does it need reporting to HMRC? If the answer to any of these is yes, do it now - not next quarter.