Cap Table
A Cap table, short for Capitalization table, is a document that provides a snapshot of a company's equity ownership structure. It lists out who owns what percentage of the company's shares, including founders, investors, employees, and other stakeholders.
Example #1
For example, a startup may have a Cap table showing that the founders collectively own 60% of the company, an investor owns 30%, and employees own the remaining 10% through stock options.
Example #2
In another scenario, a well-established company may have a Cap table indicating that private equity firms hold 70% of the shares, while the remaining 30% is distributed among company executives and employees.
Misuse
Misuse of a Cap table can occur when inaccurate information is intentionally provided to mislead investors or stakeholders. For instance, a company might manipulate the Cap table to inflate the value of its shares, leading investors to overpay for equity. This deceit can harm investors by distorting the true value of their investments.
Benefits
A key benefit of a Cap table is that it promotes transparency and fairness by clearly outlining the ownership structure of a company. This can help investors, employees, and other stakeholders make informed decisions based on accurate information.
Conclusion
In the context of CAP's mission, maintaining integrity and transparency in Cap tables is crucial to protect the interests of investors and employees. By ensuring the accuracy and honesty of Cap tables, companies can build trust with their stakeholders and foster a fair marketplace.