Cap Table Management: A Legal Guide for Irish Founders
Your cap table is the single document that records who owns what in your company. Get it wrong and you will face problems from issuing equity incentives to key employees, closing your next funding round and on the path to selling your company. Get it right and you have a clear, defensible record that gives investors confidence and keeps founders clear on the ownership of their own company.
This guide explains how to build and maintain a cap table for an Irish startup, the legal obligations that sit alongside it, and the mistakes that trip up founders most often.
What Is a Cap Table?
A cap table, short for capitalisation table, is a document that records the ownership structure of your company. It lists every shareholder, the number and class of shares they hold, their percentage ownership, and any rights or instruments that could convert into shares in the future, .such as convertible loan notes , SAFEs and options under the company's employee share scheme
In Ireland, while quite similar, the cap table is distinct from the register of members , which is the statutory record every company must maintain under the Companies Act 2014 . The register of members is a legal requirement and tracks share ownership. The cap table is a working document that goes further, it includes not just issued shares but also options, warrants, convertible instruments, and anything else that affects ownership on a fully diluted basis.
Both documents should agree on the basics, who holds shares and how many. But the cap table gives you the full picture that the register of members alone does not.
Why an Accurate Cap Table Matters
Fundraising - Investor will ask for your cap table during due diligence . Errors or inconsistencies raise immediate red flags and can delay or derail a round.Equity decisions - You cannot make informed decisions about issuing new shares, granting options, or structuring a round without knowing where you stand.Exits - On the sale of your company or IPO, the cap table determines who gets paid and how much. A messy cap table creates uncertainty, which can lead to disputes, at the worst possible time.Compliance - The Companies Act 2014 requires accurate statutory records. Discrepancies between your cap table, register of members and other legal documents can trigger compliance issues.
Building Your Cap Table from Day One
The best time to create a cap table is the day you incorporate. At that point, the cap table is simple, it just the founders and their shares. But starting early establishes the discipline of recording every equity event as it happens.
Founder Shares
Record the initial allocation clearly: how many shares each founder receivedand the class of shares (typically ordinary).
Share Classes and Rights
Most newly incorporated Irish LTDs start with a single class of ordinary shares . As the company raises funding, new classes, typically preference shares, are created. The company may also create a class of shares with lesser rights to the ordinary shares, such as non-voting shares, reserved for employees or advisors. The cap table should track each class separately.
Choosing a Format
For very early-stage companies, a well-structured spreadsheet works. But spreadsheets become error-prone as the cap table grows. Dedicated cap table management software (such as SeedLegals, Carta, or Pulley) automates calculations, tracks vesting schedules , and generates reports that investors expect to see. If you plan to raise institutional funding, moving to dedicated software before your first priced round is a worthwhile investment.
Fully Diluted Share Capital
Investors do not look at your issued shares alone. They look at your fully diluted share capital, which the total number of shares that would be outstanding if every option, warrant, and convertible instrument were exercised or converted.
What "Fully Diluted" Includes
Issued shares - All shares (ordinary, preference etc.) currently issued.Granted but unexercised options - Employee options that have been granted under your employee share scheme, whether vested or unvested.Unallocated option pool - Shares reserved for future option grants that have not yet been allocated to specific employees.Convertible instruments - Convertible loan notes, advance subscription agreements (ASAs), and SAFEs that will convert into shares on a qualifying event.Warrants - Rights to purchase shares at a fixed price in the future.
Calculating Ownership Percentages
Ownership percentages should always be calculated on a fully diluted basis. If the founders hold 500,000 ordinary shares of 800,000 shares that have been issued, but the fully diluted total is 1,000,000 (for example, when factoring in convertible loan notes that have not yet converted), they own 50% of the company on a fully diluted basis, not the higher percentage they might calculate by looking only at issued shares (and ignoring the loan notes).
This distinction matters most when negotiating a funding round. The investor's percentage is calculated on a fully diluted basis, which means existing shareholders are diluted not just by the new shares issued to the investor but also by the option pool and any outstanding convertible instruments.
Scenario Modelling
Before any funding round, model how the cap table changes under different scenarios: different valuations, different round sizes, and different option pool expansions. This shows you what your ownership looks like after the round closes and helps you negotiate from a position of knowledge rather than guesswork.
Tracking the Employee Option Pool
The employee option pool is one of the most important, and often mismanaged, elements of a cap table.
Pool Size and Availability
Record the total authorised pool (typically 10–15% of fully diluted equity), how much has been granted, how much is vested, how much has been exercised, and how much remains available for future grants. Investors will want to see this breakdown clearly.
Granted, Vested, Exercised, and Lapsed
Every option grant should be tracked individually:
Granted - The total number of options allocated to the employee.Vested - The number of options the employee has earned based on the vesting schedule.Exercised - Options that have been converted into actual shares.Lapsed - Options that have expired or been forfeited (for example, when an employee leaves before the options have vested).
Lapsed options should return to the unallocated pool. Failing to track this accurately means you will overstate your committed equity and understate what is available for future hires.
KEEP Scheme Considerations
If your company uses the KEEP (Key Employee Engagement Programme) scheme, there are additional requirements. KEEP options must meet specific qualifying conditions. Not all optionholders may meet these conditions. Your cap table should flag which options are KEEP-qualifying and track the aggregate limit.
Option Pool Expansion and Dilution
Investors frequently require the option pool to be expanded before a funding round closes, meaning the dilution from the expansion falls on existing shareholders (primarily founders) rather than on the new investor. Understanding this dynamic is essential, it is one of the most common ways founders are diluted beyond what the headline valuation suggests.
Updating the Cap Table After Funding Events
Every equity event should trigger a cap table update. Delays create discrepancies that compound over time.
New Share Issuances
When new shares are issued, whether in a priced round, an option exercise, or a conversion event, update the cap table immediately. Record the number of shares, the class, the price per share, and the identity of the new shareholder.
Convertible Instrument Conversion
When a convertible loan note, SAFE or ASA converts into equity, the cap table must reflect the new shares issued. Convertible instruments that have not yet converted should remain on the cap table as a separate line item showing their potential dilutive effect.
Share Transfers and Buybacks
If shares change hands, through a secondary sale, a share buyback, or a transfer between related parties, the cap table must be updated to reflect the new holder. The register of members must also be updated, and in the case of a transfer, a stock transfer form should be completed.
Reconciliation with CRO Filings
After every share issuance, the company must file a Form B5 with the CRO within 30 days. After every share transfer, the register of members must be updated. Periodically reconcile your cap table against these statutory records to catch any discrepancies before they become problems.
Common Cap Table Mistakes
These are the errors we see most often, and each one creates real problems when it matters most, during fundraising, hiring, or exit.
Not Recording Informal Equity Promises
Verbal promises of equity to early employees, advisers, or contributors are common in the startup world. If these promises are not documented and reflected in the cap table, they surface at an inconvenient time, such as during investor due diligence or an exit process. Every equity commitment, no matter how informal, should be recorded.
Failing to Account for Anti-Dilution Adjustments
If your investors hold preference shares with anti-dilution protections , a down round will trigger an adjustment to their conversion ratio. This changes the fully diluted calculation and affects everyone’s ownership percentage. Failing to model these adjustments means your cap table does not reflect reality.
Inconsistencies Between Cap Table and Legal Documents
Your cap table should match your constitutional documents, shareholders' agreement , subscription agreements, and option grant letters. Discrepancies, even small ones, create confusion and can lead to disputes. A common example is a cap table that shows a different number of shares than the register of members because a share allotment was recorded in one but not the other.
Letting the Cap Table Drift Between Rounds
Many founders update their cap table when a funding round happens and then ignore it until the next round. In between, option grants are made, options lapse, convertible instruments are issued, and none of it is recorded. By the time the next round comes, the cap table requires a significant cleanup, which delays the round and erodes investor confidence.
Overlooking Convertible Instruments
Convertible loan notes, SAFEs, ASAs, and warrants all affect equity dilution when they convert. If they are not reflected in the fully diluted calculation, you are overstating existing shareholders' ownership. This can lead to unpleasant surprises when the instruments convert and the actual ownership percentages shift.
Cap Table Hygiene Before Fundraising
Before entering a funding round, clean up your cap table so it withstands investor scrutiny.
Resolve Discrepancies
Compare your cap table against the register of members, CRO filings (Form B5 returns), and all legal documents (constitution, shareholders' agreement, option agreements). Fix any discrepancies before sharing the cap table with potential investors.
Prepare a Summary View
Investors typically want to see:
A summary cap table showing each shareholder class, the number of shares, and the percentage ownership on a fully diluted basis.
An option pool summary showing the total pool, investors may also want details around granted options, vested options, exercised options, and available pool.
A convertible instruments schedule listing each outstanding loan note, SAFE or ASA, the principal amount, conversion terms, and estimated shares on conversion.
A waterfall analysis showing how exit proceeds would be distributed at different valuations.
Model the Post-Round Cap Table
Prepare a pro-forma cap table showing what ownership looks like after the proposed investment. Include the new shares, any option pool expansion, and any converting instruments. This is the document you will negotiate from, and it needs to be accurate.
Common Red Flags Investors Watch For
Missing or unsigned option agreements - Options that appear on the cap table but have no supporting legal documentation.Unresolved equity promises - Verbal commitments that have not been formalised.Stale convertible instruments - Loan notes , SAFEs or ASAs that should have converted but have not been processed.Incomplete CRO filings - Share allotments that have not been filed with the CRO. 
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