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

We handle founder splits, subdividing a single £1 share, vesting, section 431 elections and share issues to investors, and keep your cap table, the record of who owns which shares, in agreement with what Companies House holds.

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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.

Most founders we speak to incorporated through a web form, and most of them ended up with a company limited by shares holding exactly one £1 ordinary share. That company is valid, but with one share you cannot express a percentage, bring in a co-founder cleanly, or issue shares to an investor without first subdividing it.

This is straightforward while the company is worth almost nothing. 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. After that, changes to the share structure have to be negotiated.

The share structure work we do

  1. 1
    Subdividing a single share

    One £1 share becomes 10,000 shares of 0.01p each, or 100,000 shares of 0.001p each. Do it before a co-founder or an investor joins, because that is when you first need to express a percentage.

  2. 2
    The founder split

    We allot shares between founders in the proportions you have agreed, and we agree those proportions with you before any paperwork is done. Disputes over equity splits are a common reason founders fall out.

  3. 3
    Vesting and section 431

    Founder shares are earned over time with a cliff, and the joint section 431 election is filed within 14 days of acquisition, while the shares are worth almost nothing. The window is strict and there is no late route.

  4. 4
    Share classes

    One class of ordinary shares is right for almost every new startup. Further classes are added only when a round or a specific commercial need requires them.

  5. 5
    Issuing to investors

    We handle the allotments, the register of members and the order in which SEIS and EIS shares are issued. Getting that order wrong can only be reversed with a court application.

  6. 6
    Keeping it in agreement

    We keep your cap table, register of members, register of people with significant control and confirmation statement in agreement at all times, so a due diligence request can be answered in a morning.

A worked example of a founder restructure

This example is illustrative. A company was incorporated last December with one £1 ordinary share held by a single founder. A second founder has since joined, they have agreed a 51/49 split, both want vesting, and there is an investor conversation starting in the spring.

First, subdivide the single share into 10,000 shares of 0.01p, so the existing founder holds 10,000 and nothing has changed economically. Then allot further shares so the two founders hold 51% and 49% of the enlarged number. For example, allotting 200 more to the first founder and 9,800 to the second gives them 10,200 and 9,800 of 20,000 shares. 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 and the tax on them is small.

Then update the register of members and the register of people with significant control, 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 job takes a few days and is done for a fixed fee. The same restructure is considerably harder once the company has a valuation.

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Share structure prices

The founder restructure

£750 + VAT
  • The share you incorporated with, subdivided
  • Allotted between founders, with the registers updated
  • Section 431 elections filed inside the 14-day window

Share issues after that

£195 + VAT each
  • Allotment, board minutes and the statutory registers
  • The Companies House filing
  • Issues forming part of a SEIS or EIS round are covered by that work instead

Keeping the records straight

Included
  • Cap table, statutory registers and the confirmation statement kept in agreement
  • Covered by your monthly fee

Each price is agreed in writing before we start.

Share structure questions

What does a share restructure cost?

A founder restructure is £750 + VAT. That covers subdividing the share you incorporated with, allotting shares between founders, updating the registers and filing the section 431 elections inside the 14-day window. Share issues after that are £195 + VAT each. We agree the price in writing before we start.

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

It is a common structural problem, and it is easier to fix now than later. One share means you cannot transfer 10% of the company without subdividing first, and bringing in a co-founder at 49% takes extra steps. We subdivide it into a workable number, typically 10,000 or 100,000 shares at a low nominal value, so that any percentage can be expressed and future share issues are straightforward.

How do we split shares between two founders?

The paperwork is a subdivision and an allotment, and it takes days. The split itself is a serious commercial decision, so we first talk through what each of you is contributing, over what period, and what happens if one of you leaves in the first year. A 50/50 split with no terms for a departing founder can leave the company unable to make decisions, 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, which is a first period before any shares are earned. It protects the founders who stay if another founder leaves after four months holding half the company. Investors will generally require it, and it is far easier for founders to agree before a funding round than during one.

What is a section 431 election and when do we need one?

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 usually means a tiny amount of tax now, and it removes 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. 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 must give Companies House their identity verification code when they are added to the register or within 14 days of it. The duty falls on your investor, and a missing code shows on your company's register.

Can you keep our cap table up to date?

Yes. The register of members, the register of people with significant control, the confirmation statement and your own cap table (the record of who owns which shares) have to agree with each other, and they drift apart whenever a round, an option grant or a transfer happens. We keep the statutory records and the filings aligned, so an investor's due diligence request can be answered in a morning.

Talk to us about your share structure.

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