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Share structure & cap table

Get the share structure right while it is still cheap to change.

Founder splits, subdividing that single £1 share, vesting, section 431 elections, issuing to investors, and a cap table that agrees with what Companies House actually holds.

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The short answer
We restructure and maintain startup share registers: subdividing shares issued at incorporation, splitting equity between founders, putting vesting and section 431 elections in place, issuing shares to investors, and keeping the cap table, the statutory registers and the Companies House filings in agreement.

Almost every founder we speak to incorporated through a web form, and almost every one of them ended up with a company limited by shares holding exactly one £1 ordinary share. It is a perfectly valid company. It is also a company in which you cannot express a percentage, cannot bring in a co-founder cleanly, and cannot issue to an investor without first doing something you should have done at the start.

None of this is difficult while the company is worth almost nothing. All of it becomes difficult, and occasionally expensive, once there is value in the shares, a second founder with an expectation, or an investor reading your register. The window where this is a paperwork exercise rather than a negotiation is short, and it closes quietly.

What we sort out

The structural work, in the order it usually happens

Subdividing that one share

One £1 share becomes ten thousand at a penny, or a hundred thousand at a hundredth of a penny. Nominal value low enough that issuing shares later costs nobody anything, and enough of them that any percentage you might want to express is expressible.

The founder split

Allotting between founders in the proportions you have actually agreed, with the commercial conversation about contribution and leavers had before the paperwork rather than after it.

Vesting and section 431

Shares earned over time with a cliff, and the joint election within 14 days of acquisition that stops future growth being taxed as employment income. Miss the window and there is no late route.

Share classes, when you need them

Usually you do not, and one class of ordinary shares is right for almost every new startup. When a round or a specific commercial need genuinely requires more, we set it up deliberately rather than inheriting whatever a template produced.

Issuing to investors

Allotments, the register of members, and the SEIS and EIS sequencing that has to be right first time. See our SEIS and EIS page for how that fits together.

Keeping it all in agreement

Cap table, register of members, PSC register and confirmation statement, all saying the same thing. This is what turns a due diligence request into a morning rather than a fortnight.

A worked example

One share to a working cap table

A company incorporated last December with one £1 ordinary share held by a single founder. A second founder has since joined, they have agreed 51/49, both want vesting, and there is an investor conversation starting in the spring. This is close to the most common set of facts we see.

The sequence is: subdivide the single share into 10,000 shares of 0.01p, so the existing founder holds 10,000 and nothing has changed economically. Allot further shares so the two founders hold 51% and 49% of the enlarged number. Put the vesting terms into a founders’ agreement, and file the section 431 elections within 14 days of the restricted shares being acquired — while the shares are worth almost nothing, which is exactly why doing it now is cheap.

Then update the register of members and the PSC register, because on a two-founder company both of them will now be people with significant control, and each of them has an identity verification duty of their own. The whole thing is a few days’ work and a modest fixed fee. The same restructure attempted after a valuation exists is a different and considerably less pleasant conversation.

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Share structure questions

Straight answers

We incorporated with one £1 share. Is that a problem?

It is the single most common structural mistake, and it is easy to fix now and awkward to fix later. One share means you cannot transfer 10% of the company without subdividing first, and you cannot bring in a co-founder at 49% without doing arithmetic that should never have been necessary. We subdivide it into a sensible number — typically 10,000 or 100,000 shares at a low nominal value — so that percentages become expressible and future issues do not require surgery.

How do we split shares between two founders?

Mechanically it is a subdivision and an allotment, and it takes days. Commercially it is the decision most likely to end a company, so we would rather talk about it properly first: what each of you is contributing, over what period, and what happens if one of you leaves in year one. A 50/50 split with no leaver provisions is a deadlock waiting to happen, and a 51/49 split changes who controls the company in a way both people should understand before signing.

What is founder vesting and do we need it?

Vesting means your shares are earned over time rather than owned outright on day one, usually with a cliff. It protects the founders who stay from the one who leaves after four months holding half the company. Investors will generally require it, and it is far easier to agree between founders before there is money on the table than during a round.

What is a section 431 election and why does it keep coming up?

Where shares carry restrictions — which vesting shares do — a joint election within 14 days of acquisition means you are taxed on the unrestricted value now rather than on future growth as employment income later. On founder shares worth very little at incorporation, that is usually a tiny amount of tax now in exchange for removing a potentially large income tax charge on exit. The 14-day window is strict and there is no late route.

Will issuing shares to an investor create new obligations?

Yes, and they are easy to miss. Anyone ending up with more than 25% of the shares or voting rights becomes a person with significant control, goes on the public register, and now has their own identity verification duty at Companies House timed to their birth month. That is your investor's obligation, but it is your register that shows the gap and your confirmation statement that can be affected.

Can you keep our cap table up to date?

Yes. The register of members, the PSC register, the confirmation statement and your own cap table have to agree with each other, and they drift the moment a round, an option grant or a transfer happens. We keep the statutory records and the filings aligned, which is also what makes a due diligence request a morning's work rather than a fortnight's archaeology.

Founder splits, vesting, cap tables

Fix the share structure before it costs something to fix.

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