Cap Table Clean-up for UK Raises: Common Fixes and How-To

A cap table is a simple list that shows who owns shares in your startup and how much. It tracks ordinary shares, options, convertibles, and any promises to issue more. When it is tidy, you know your true ownership and dilution. When it is messy, fundraising slows or stalls.

Investors scan the cap table first. They look for clear totals, clean classes, and evidence of good housekeeping. If they see gaps, conflicts, or surprise claims, they pause. That pause costs time, legal fees, and momentum.

Here is a quick example. A UK SaaS company lined up a lead for a seed round, then hit a three week delay. Old advisor options were not cancelled, an informal ASA lacked dates, and EMI grants were unfiled with HMRC. The lead asked for fixes, the round slipped, and legal costs doubled.

Cap table cleanup is part of serious fundraising preparation. You remove expired options, fix share class labels, and reconcile the option pool. You document ASAs and convertible notes, set clear conversion terms, and align them to the round. You reflect leaver outcomes, update vesting, and file the changes at Companies House.

UK rules matter. EMI options need HMRC valuation support and on-time notifications. SEIS and EIS advance assurance depends on clean share structures, no hidden preferences, and correct investor paperwork. Growth shares and alphabet shares must match your articles and your promises to investors.

The payoff is real. A clean cap table speeds due diligence, reduces legal chasers, and builds trust. It makes your company look professional and ready for growth. It also protects founders from surprise dilution.

This guide will show the common fixes and how to do them, step by step. You will learn what to tidy, what to file, and what to document before you open the round. Use it as a checklist for a smooth close, lower costs, and stronger investor confidence. It is the smart move before you raise.

Spot the Most Common Cap Table Problems Before They Hurt Your Raise

Spot issues early, fix them fast, and keep your round on track. This section flags the cap table problems that spook UK investors during diligence, slow legal work, and distort pricing. Use it as a quick sense check before you open the data room.

Outdated Ownership Records That Confuse Everyone

When share records are stale, everything else breaks. Missing allotments, wrong totals for the option pool, or unreflected leaver outcomes all distort ownership percentages. That flows into bad dilution maths during the round.

Common causes:

• Unfiled share allotments: Shares issued but not recorded in the cap table or at Companies House.
• Option exercises not posted: Employees exercise options, yet the register and cap table still show them as options.
• Leavers not processed: Former team members keep unvested or lapsed options on paper, which inflates fully diluted totals.
• Round edits not reconciled: Last round assumptions about pool size or pre-money valuation never matched the signed documents.

Why it matters in a raise:

• Wrong pre and post-money split. Incorrect totals overstate or understate founder and investor ownership.
• Mispriced option pool. If the pool count is wrong, the pre-money suffers more dilution than planned.
• SEIS/EIS risk. Inconsistent records can undermine investor confidence and slow checks on eligibility and share classes.

Quick actions:

1. Reconcile the shareholder register, option ledger, and Companies House filings.
2. Reflect all leaver outcomes and vesting, including forfeitures and buy-backs.
3. Update the option pool and exercises, and verify totals on a fully diluted basis.
4. Cross-check formulas and rounding in the model. Simple rounding errors cause real variance, as noted in Orrick’s UK guide on cap tables, see UK Founder Series: Getting to Grips with the Cap Table.

Untracked Convertible Notes and SAFEs Hiding Future Shares

Convertible instruments, including Convertible Loan Notes and ASAs in the UK, are loans that turn into equity later. They often convert at a discount or under a valuation cap. If you do not record them properly, you hide future shares that will arrive on conversion.

What goes wrong:

• Missing instruments. A founder signed an ASA to bridge cash, then never added it to the cap table.
• Terms not captured. Discount, cap, interest, and conversion triggers live in emails, not your model.
• Stacked side letters. Favours or MFN-style rights create different outcomes for each holder.

Why it matters:

• Hidden dilution. Your fully diluted number is wrong without these instruments.
• Pricing tension. Leads cannot model conversion outcomes, so they slow the process or push for wider protections.
• Article alignment. Articles of association need to support the conversion mechanics agreed.

What to log, in plain terms:

• Instrument type, principal, discount, cap, interest, and qualifying financing thresholds.
• Any most favoured nation promise or special rights.
• The expected conversion price and share class at the next round.

For a practical overview of common mistakes and fixes from a UK lens, see this piece by a startup lawyer, Cap Table Management Tips from a Startup Lawyer.

Too Many Small Investors Creating Management Headaches

A long tail of tiny shareholders looks democratic, but it complicates life. Administration grows, consents are slow, and new investors worry about governance.

Pain points:

• Shareholder consent drag. Getting signatures for resolutions takes time when many holders are involved.
• Notices and pre-emption. Serving notices and running pre-emption across dozens of holders adds cost and risk.
• Future rounds. New backers prefer clean cap tables with clear decision making.

Practical fixes:

• Use nominee or SPV structures for small cheques where possible.
• Consolidate small holdings by offering clean buy-backs or tender offers before the round.
• Tighten shareholder communications. Keep email records up to date and use e-signature for speed.
• Clear pre-emption process. Define timelines and give concise instructions to reduce back and forth.

Investor optics:

• Fewer line items, clearer governance, and faster approvals signal strong housekeeping and reduce closing friction.

Multiple Versions or Conflicting Data Causing Doubts

Two cap tables, three models, and a different number in the confirmation statement will kill momentum. Conflicts raise red flags about control, competence, and risk.

Where conflicts creep in:

• Finance keeps a spreadsheet, legal maintains the register, HR tracks options in a separate file.
• A new model imports the wrong share class labels or misses fractional rounding rules.
• Companies House filings do not match the internal ledger after a late edit.

How to fix it:

1. Pick one source of truth for cap table data.
2. Lock version control and set edit rights.
3. Reconcile against signed documents, board minutes, and Companies House filings.
4. Run a lightweight monthly audit so drift does not reappear.

Signal to investors:

• Clean, consistent data supports faster due diligence and fewer legal chasers. It also reduces the risk of re-cutting the model late in the process, which protects valuation and timelines.

Unclear Rights for Some Shareholders That Scare Off New Backers

Special rights are normal, but they must be clear and recorded. If anti-dilution, liquidation preferences, or enhanced voting are vague or scattered, new investors pull back.

What to clarify:

• Anti-dilution protections. Is it broad-based weighted average or full ratchet, and how is it triggered?
• Liquidation stack. Multiple preference layers need a clear waterfall.
• Pre-emption and pro rata. Who has it, and on what terms?
• Information rights. What reporting is promised, and how often?
• Board rights and consents. Which matters need investor approval, and at what threshold?

Why clarity helps:

• No surprises in the model. Investors can price risk accurately when rights are unambiguous.
• SEIS/EIS confidence. Clean ordinary shares for SEIS/EIS investors, with no hidden preferential rights, help preserve relief.
• Faster negotiation. If your articles and side letters are aligned and accessible, lawyers move quicker.

Practical steps:

• Summarise all investor rights in a short term sheet summary.
• Check articles and any side letters for conflicts and update before the raise.
• Map how each right affects the model on conversion and exit scenarios.

For a broader view of frequent cap table gaps seen by UK investors, the UKBAA review of common mistakes is useful, see The Most Common Cap Table Mistakes (and How to Fix Them).

Simple Steps to Fix Your Cap Table and Get Raise-Ready

Clean structure, clear totals, and predictable conversion outcomes are what UK investors want to see. The steps below tidy the records, surface hidden dilution, and reduce admin before term sheet talks begin. Follow them in order so you end with one source of truth that aligns with your articles, EMI records, and Companies House filings.

Build One Reliable Cap Table with the Right Tools

Pick a single system as your source of truth. For UK raises, choose software that supports EMI option workflows, UK share classes, and exportable ledgers that match Companies House. Tools should handle grants, exercises, transfers, and conversions without manual workarounds.

What to look for in software:

• UK readiness: EMI grant tracking, HMRC notification dates, and ordinary versus preference classes.
• Audit trail: Time-stamped edits, document links, and cap table snapshots by date.
• Scenario modelling: Pre and post-money views, pool top-ups, and conversion of notes and ASAs.
• Registers and exports: Shareholder register, option ledger, and Companies House friendly outputs.

Practical picks often include Carta, Pulley, Cake, or Ledgy. Compare features and pricing with a neutral overview such as this guide on best cap table management software. If you want a wider market list, this review of top cap table platforms is a useful cross-check.

How to migrate data accurately:

1. Gather signed documents, board minutes, option agreements, and the shareholder register.
2. Rebuild the cap table as-of the date of incorporation, then post each event in order, including option grants, exercises, transfers, and allotments.
3. Reconcile totals against the last confirmation statement and PSC register.
4. Lock edit rights, document assumptions, and save a baseline snapshot before modelling the round.

Track and Model All Future Shares from Notes and Options

Record every instrument that can turn into equity. In the UK this usually means Convertible Loan Notes, ASAs, CSOP options, and EMI options. Store the signed documents, then enter the terms into your tool and spreadsheet model so outcomes are consistent.

For convertibles, log:

• Principal and any accrued interest to date.
• Discount and valuation cap.
• Qualifying financing threshold and any most favoured nation clause.
• Conversion share class at the next round and whether the conversion price references pre or post-money.

For options, log:

• Plan type (EMI or unapproved), grant date, and exercise price.
• Vesting schedule and any acceleration rules.
• Hurdles for growth shares, if used.

Model the impact:

• Build a fully diluted base that includes the existing option pool, unvested options, and expected conversions at a realistic round size.
• Show the pool top-up pre-money if that is the deal norm, since it dilutes existing holders not the new investor.
• Run high and low cases for the round size, since conversion price and pool mechanics will move.

Outputs to share in diligence:

• A one-page conversion summary by instrument.
• A fully diluted cap table pre and post-round.
• A checklist of assumptions that links back to the signed documents.

Group Small Investors to Simplify Your Ownership List

A long list of tiny holders slows consents and adds legal cost. Use nominee or SPV structures so small cheques sit behind a single line on the cap table, with voting and admin handled by the nominee.

Common UK routes:

• Nominee: Shares are legally held by a nominee company for many investors. You get one line on the register and one point of contact for notices, pre-emption, and consents.
• SPV: A special purpose vehicle holds the shares and the SPV units sit with the underlying backers. Useful for syndicates or angel groups.

Pros:

• Less admin: Fewer notices, faster written resolutions, and simpler pre-emption runs.
• Cleaner optics: Investors see clear decision making and a compact ownership list.
• Better data hygiene: One holder keeps their own sub-ledger for underlying investors.

Watch-outs:

• Check how the nominee handles pre-emption and information rights.
• Confirm SEIS/EIS treatment for underlying investors if relevant.
• Update articles and the shareholders’ agreement if consent thresholds need a nominee carve-out.

Practical steps before a raise:

1. Offer small holders a move into a nominee or SPV, or run a tidy buy-back where appropriate.
2. Set a minimum cheque size for new direct holders in the round.
3. Keep a clean contact list and use e-signatures for speed.

Clear Up Special Rights and Dead Equity Issues

Old grants and unclear rights create friction. Clean them before you open the data room.

Tidy vesting and leaver outcomes:

• Process leavers: Apply the agreed good or bad leaver terms. Forfeit unvested options and complete any buy-backs for vested shares.
• Update the ledger: Reflect lapses and exercises, then refresh fully diluted totals.
• EMI hygiene: Check EMI valuations, working time declarations, and HMRC notifications were filed on time. Late filings risk tax treatment.

Remove or reshape dead equity:

• Cancel expired options: Clear out grants past the exercise window.
• Buy back tiny inactive stakes: Use board-approved buy-backs within statutory rules, then file the SH03 and update the register.
• Tidy advisory grants: Close out old advisory options that never vested or where the engagement ended.

Clarify special rights:

• Summarise all investor rights in a simple schedule, including liquidation preferences, anti-dilution basis, pro rata rights, information rights, and reserved matters.
• Align documents: Make sure the articles, investment agreements, and side letters match. Remove conflicts that would complicate the next round.
• Model the waterfall: Show how preferences pay out and how anti-dilution might trigger in down or flat scenarios.

Outcome to aim for:

• Clean ordinary shares for SEIS/EIS investors.
• A current option pool that reflects real hiring plans, not legacy promises.
• Clear, consistent rights that match the model and the legal documents.

If you also need a software-led view of equity housekeeping, this comparison of cap table tools and features is a helpful sense check while you finalise your process.

Ongoing Habits to Keep Your Cap Table Clean Long-Term

A tidy cap table is not a one-off project. It is a routine. Build simple habits, document them, and run them every month. This keeps you raise-ready, protects SEIS/EIS, and reduces last-minute scramble with HMRC and Companies House.

Run a Monthly Reconciliation and Audit Trail

Close the books on your equity every month. Treat it like management accounts for ownership.

• Reconcile the shareholder register, option ledger, and the live cap table. They should match, line by line.
• Post every event, including option grants, exercises, lapses, share transfers, allotments, buy-backs, and conversions.
• Save a dated snapshot and lock edit rights. Keep a short changelog so you can explain variances in diligence.
• Tie totals back to board minutes and signed agreements. Flag gaps early, then fix them in the same cycle.

The aim is simple. One source of truth, supported by documents, with a history you can share.

Keep Companies House and Statutory Registers in Sync

Do not let filings drift. Investors check public data first.

• File share allotments promptly with an SH01, then update the register.
• Record buy-backs or share cancellations and file the SH03 where required.
• Update the PSC register when control changes.
• Check the confirmation statement (CS01) aligns with your current register before you file.
• Keep addresses and director details current to avoid follow-up queries.

Set a calendar reminder after every equity event. File, then reconcile.

Maintain an HMRC Options Compliance Calendar

EMI and CSOP options need clean process and on-time filings.

• Log each grant with grant date, plan type, exercise price, vesting, and any performance hurdles.
• Notify HMRC within the required deadline for EMI grants. Track working time statements and valuation support in your file.
• Record exercises with the tax position and collect any PAYE or NIC where due.
• Refresh EMI valuations on a sensible cadence, and before material price-sensitive events.
• Keep board approvals and plan rules in the same folder as each grant.

Missed steps lead to tax problems for staff. A simple calendar avoids that.

For a helpful UK legal overview on equity records and investor readiness, see Sprintlaw’s guide on how cap tables work for UK startups.

Control Documents and Versioning

Equity hygiene fails when documents scatter.

• Store signed agreements, board minutes, articles, option plans, and side letters in one secure drive.
• Use clear file names with dates. Example: “EMI_Grant_JSmith_2025-02-12_signed.pdf”.
• Restrict edit rights on the cap table. Share read-only links for most users.
• Keep a short data dictionary for your model, including class labels, pool rules, and rounding.

Good document control lets lawyers work faster and reduces rework during diligence.

Track Convertibles and Waterfalls Continuously

Hidden dilution appears when instruments sit off-sheet.

• Maintain a register for ASAs and Convertible Loan Notes with principal, interest, discount, cap, MFN terms, and conversion triggers.
• Model expected conversion outcomes at the likely round size and keep it current.
• Store the conversion mechanics you agreed in one summary so the model and the articles align.
• Refresh your liquidation waterfall as new preference shares are issued. Share a simple one-pager in the data room.

A living conversion and waterfall file prevents surprises and pricing disputes. For a compact habits list that pairs well with this approach, this summary of clean cap table habits offers a useful cross-check.

Right-Size and Refresh the Option Pool

The pool should match the hiring plan, not legacy promises.

• Forecast hires for 12 to 18 months and size the pool to match.
• Clear dead equity. Cancel expired options and lapse unvested grants for leavers, then update fully diluted totals.
• Record option exercises quickly and move holders into the register without delay.
• Document any pool top-up before a round and model the dilution effect clearly.

A realistic pool protects pricing and avoids late-stage edits.

Streamline Investor Communications and Consents

Fast approvals save weeks during a raise.

• Keep a current contact list for all holders, with e-signature ready.
• Use a nominee for small cheques so you have one point of contact.
• Pre-draft standard resolutions for allotments, option grants, and buy-backs.
• Run pre-emption with clear timelines and instructions. Store offers and responses together.

Clean process, fast signatures, and fewer line items signal strong governance.

Operate a Simple Quarterly Health Check

Every quarter, step back and review the whole picture.

• Compare the cap table to Companies House and your last CS01.
• Re-test SEIS/EIS investor entries for ordinary shares and rights compliance.
• Check EMI records and HMRC notifications for the quarter.
• Validate your model against the latest hiring plan and cash runway.

This rhythm keeps your equity tidy, your filings current, and your next round on track.

Conclusion

Clean records win rounds. Tidy the register, reflect leaver outcomes, cancel dead options, and bring convertibles on-sheet. Align your cap table with your articles, EMI files, and Companies House. Check SEIS and EIS investors hold ordinary shares with no hidden preferences. When these fixes are in place, diligence moves faster, costs fall, and you keep momentum.

Make this practical. Pick one source of truth, reconcile it monthly, and save a snapshot. Track EMI dates and HMRC notifications. Keep a simple conversion summary for ASAs and notes, and a clear waterfall for preferences. Size the option pool to your hiring plan and model the pool top-up in the pre-money. Small, steady habits beat a last-minute scramble.

Start today. Run a quick audit against your latest CS01 and board minutes. Close out lapses and late filings, then refresh fully diluted totals. If you want a head start, download a cap table template, rebuild the history event by event, and share a one-page summary with your leadership team. If the picture is complex, book a short consult with a UK startup lawyer or an equity ops specialist.

Small steps now, smoother pricing later. Fewer surprises, faster signatures, stronger trust.

Contact us today for a free 30-minute no-obligation discussion on how to clean up your Cap Table at info@consultEFC.com