Ownership basics
Understand stock splits and ownership percentages
Work through forward and reverse stock splits, proportional ownership, per-share prices, and the effect of whole-share rounding.
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A split changes the units used to count shares
A proportional stock split increases the share count without itself diluting the existing holders. The SEC’s stock split explanation distinguishes this from issuing new shares to additional investors.
The examples below assume every affected holding changes by the same ratio, no fractional-share adjustment, and no simultaneous issuance or other transaction. They illustrate arithmetic, not a prediction of market value.
Work through a 5-for-1 split
| Measure | Before | After |
|---|---|---|
| Company shares | 1,000,000 | 5,000,000 |
| Holder shares | 100,000 | 500,000 |
| Holder ownership | 10% | 10% |
| Illustrative per-share amount | $10 | $2 |
| Holder shares × per-share amount | $1,000,000 | $1,000,000 |
Multiply share quantities by five and divide comparable per-share amounts by five. The percentage stays at 100,000 ÷ 1,000,000 = 500,000 ÷ 5,000,000 = 10%. The split itself does not contribute new cash.
In Cap Table, a recorded split restates the relevant quantities and per-share amounts. It does not multiply a SAFE’s principal or the amount invested in a note.
Review reverse splits and fractional results
A reverse split consolidates shares. A 1-for-4 ratio turns 400 shares into 100 before other adjustments. The SEC’s reverse split overview describes this reduction in share count.
Fractions require separate attention. A holding of 101 shares divided by four is 25.25 before rounding. If the app records a whole-share quantity, its final result can differ from exact proportional arithmetic. Review each affected record and reconcile the treatment with the actual split documents.
Do not infer a cash payment for a fraction merely because the app rounds a quantity. The rounding convention and any actual cash-in-lieu arrangement are different facts.
Keep historical units explicit
A report from before a split and a current report may show different counts for the same economic holding. Label their units before comparing them. Cap Table’s historical view reverses later splits for earlier dates; its plan movement ledger expresses earlier movements in today’s units.
When entering an old record after a split, follow the form’s current-unit warning. Verify the result on both sides of the split date. Use Record a stock split for the ratio, date, preview, and recovery workflow.