Draft — Cap Table Resolution

Draft — Cap Table Resolution

When to use this

A cap table resolution is required whenever a company's equity ownership structure changes. Without a board or shareholder resolution formally authorizing the change and directing the share register update, the equity event is not properly documented and may be challenged.

Triggering events:

• New share issuance (to new investor, existing shareholder, or employee)
• Option or warrant exercise
• Transfer of shares between existing shareholders
• Conversion of convertible note or SAFE into equity
• Share buyback or cancellation
• Creation of a new share class
• Reclassification or consolidation of existing shares
• Vesting acceleration event

Required inputs

Document structure

Resolution form

WRITTEN RESOLUTION OF THE BOARD OF DIRECTORS
OF [COMPANY NAME] ([REGISTRATION NUMBER])
Dated: [DATE]

The Board of Directors, having reviewed the [Subscription Agreement / 
Transfer Instrument / Option Exercise Notice / Conversion Notice] dated 
[DATE] relating to the [issuance / transfer / conversion] of [NUMBER] 
[CLASS] shares (the "Equity Event"), hereby RESOLVE as follows:

1. EQUITY EVENT AUTHORIZED
   RESOLVED THAT the [issuance of [NUMBER] new [CLASS] shares / transfer 
   of [NUMBER] [CLASS] shares from [Transferor] to [Transferee] / 
   conversion of [CONVERTIBLE INSTRUMENT] into [NUMBER] [CLASS] shares] 
   on the terms set out in the [Subscription Agreement / Transfer 
   Instrument] dated [DATE] be and is hereby approved and authorized.

2. UPDATED CAPITALIZATION

   Pre-Event Capitalization:
   ┌──────────────────┬───────────┬──────────┬──────────┐
   │ Shareholder      │ Class     │ Shares   │ %        │
   ├──────────────────┼───────────┼──────────┼──────────┤
   │ [Name A]         │ Ordinary  │ [X]      │ [X%]     │
   │ [Name B]         │ Ordinary  │ [X]      │ [X%]     │
   │ Option Pool      │ Options   │ [X]      │ [X%]     │
   │ TOTAL            │           │ [X]      │ 100%     │
   └──────────────────┴───────────┴──────────┴──────────┘

   Post-Event Capitalization:
   ┌──────────────────┬───────────┬──────────┬──────────┐
   │ Shareholder      │ Class     │ Shares   │ %        │
   ├──────────────────┼───────────┼──────────┼──────────┤
   │ [Name A]         │ Ordinary  │ [X]      │ [X%]     │
   │ [Name B]         │ Ordinary  │ [X]      │ [X%]     │
   │ [New Investor]   │ Pref A    │ [X]      │ [X%]     │
   │ Option Pool      │ Options   │ [X]      │ [X%]     │
   │ TOTAL            │           │ [X]      │ 100%     │
   └──────────────────┴───────────┴──────────┴──────────┘

3. SHARE REGISTER UPDATE
   RESOLVED FURTHER THAT the Company's share register (register of 
   members) be updated to reflect the post-event capitalization set out 
   above, with effect from [DATE].

4. REGISTRAR FILING [if required]
   RESOLVED FURTHER THAT [the Company Secretary / [Name], Director] is 
   authorized and directed to file the necessary notifications with 
   [Ministry of Economy / DED / DIFC Registrar / Commercial Register] 
   to register the changes to the Company's shareholding structure 
   within [X] days of this resolution.

5. SHARE CERTIFICATES [if applicable]
   RESOLVED FURTHER THAT new share certificates bearing the Company seal 
   be issued to [New Shareholder] in respect of [NUMBER] [CLASS] shares 
   and that any existing certificates affected by this Equity Event be 
   cancelled.

6. ANCILLARY AUTHORITY
   RESOLVED FURTHER THAT [Name / the Directors] are authorized to 
   execute all documents, make all filings, and take all steps necessary 
   to give effect to this resolution.

IN WITNESS WHEREOF:

_______________________        _______________________
[Director Name]                [Director Name]
Director                       Director
Date: ___________              Date: ___________

Jurisdictional filing requirements

Special cases

Convertible note conversion

When a convertible note converts to equity:

• The resolution should reference the convertible note agreement, the conversion trigger event, and the conversion price calculation.
• Attach: (a) copy of the convertible note; (b) conversion calculation showing principal + accrued interest ÷ conversion price = shares issued; (c) acknowledgment that the note is cancelled upon conversion.

Option exercise

• Reference the equity plan and option grant letter.
• Confirm the exercise price has been paid (or the exercise method: cash / net exercise / cashless exercise).
• Issue shares from the unissued option pool.

SAFE conversion

• SAFEs convert on a "qualified financing" trigger.
• Board resolution should confirm that the triggering financing qualifies under the SAFE terms.
• Confirm the conversion price methodology (cap-implied price vs discount-implied price, whichever is lower).
• See [[draft-convertible-note]] for the SAFE vs note discussion.

Common mistakes

• No pre/post cap table in the resolution: the resolution must contain or reference the updated cap table; it is the authoritative record.
• Forgetting to cancel old share certificates: uncancelled certificates can be used fraudulently; always cancel and reissue.
• Missing registrar filing deadline: in UAE and KSA, delayed filings can result in fines and the change not being recognized by third parties.
• Conversion calculation not attached: for convertible note or SAFE conversions, always attach the calculation as an exhibit to avoid future disputes about the share count.
• Not updating option pool: if shares are issued from the option pool, the resolution must note the remaining unissued pool size.

Related skills

• [[draft-board-resolution]]
• [[draft-articles-of-association]]
• [[draft-agm-minutes]]
• [[draft-convertible-note]]