Who is responsible for maintaining the cap table?

Takeaway: Usually a company’s lawyers (or their paralegals) will manage the cap table. Sometimes founders do this themselves to save money early on. I’m indifferent as to who manages it so long as they know what they’re doing.

Maintaining an accurate and up-to-date capitalization table (cap table) is essential for any startup that wants to keep track of its equity ownership structure. A cap table is a record of all outstanding securities, including common stock, preferred stock, options, and warrants, as well as the holders of those securities. This information is crucial for a startup to understand its current ownership structure and to prepare for future financing rounds or exits.

The responsibility for maintaining the cap table typically falls on the startup's finance or legal team. I prefer that startups let my team (typically our paralegals) manage their capitalization tables because they are experienced in doing so and it ensures that things are done right up front so we don’t run into any issues down the road when they are harder to fix. When my team manages the capitalization table from the start, I think it actually reduces the long-term legal bill because we do not have to spend time cleaning up erroneous or forgotten entries later (legal cleanup on cap tables can get messy).

It is important for startups to maintain an accurate and up-to-date cap table to avoid disputes and confusion over equity ownership, which can, among other things, negatively impact the company's ability to fundraise. Startups should consider using a cap table platform, such as Carta or Shareworks, to help them maintain their cap table and track equity ownership more efficiently. I typically recommend that startups let their lawyers and paralegals manage their capitalization tables.