What is a fully diluted cap table?

The fully diluted cap table is a version of the cap table with all the outstanding shares for each security along with the total shares for each convertible security when exercised.

A fully-diluted cap table displays the number of shares (or units) that can be issued, exercised and converted, along with all the outstanding shares of a company. This would also include the number of vested shares at a particular date of a vesting plan.

There are times where the exact number of shares can’t be easily figured, for instance if the total shares issuable upon exercise of a warrant is based on a formula such as the percentage of gross sales. If so, an accurately created fully-diluted cap table would hold footnotes that would explain all the assumptions for share ownership.

To explain in simpler words, the fully diluted cap table is a version of the cap table with all the outstanding shares for each security along with the total shares for each convertible security when exercised. Convertible securities would include convertible notes, stock options, warrants, and other shares that can be exercised.

A fully diluted cap table is something crucial for any investor to know about the company clearly before they make an investment. They would want to see the impact of other investments on their shareholding, and how much of their investment they would receive upon the exit period of the company.

With this, just remember that you need to keep a detailed cap table and ensure that it is always updated. Eqvista offers a FREE cap table application that can keep you up to date on all your company shares. Also, if you are still not sure what a fully diluted cap table is and want to know more, contact Eqvista today.

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