An inaccurate capitalisation table delays financings, reduces purchase prices, and is a recurring source of litigation among owners.
What it must show. Every issuance with date, consideration, and the authorising board or member action; every transfer with the required consents; every option, warrant and convertible instrument with its terms; and the fully diluted position.
Board approvals. Every issuance and grant requires an approval, and the grant date for options is the date of approval. Retroactive grant dates are a tax and securities problem, not merely an administrative one.
Securities compliance. Each issuance requires an exemption from registration and, in most cases, a state filing within a short period. Missing filings are a common diligence finding and can create rescission rights.
Reconciliation. The table should reconcile to the signed documents, not the other way around. Where they conflict, the documents govern and the table is wrong.
Option pool. Authorised, reserved, granted, exercised, forfeited and available, tracked separately.
Valuations. Contemporaneous independent valuations supporting option exercise prices, refreshed at least annually and on material events.
Cleanup. Missing consents, unsigned agreements, and undocumented promises should be resolved before a financing, when the parties are still cooperative.