Your cap table is probably wrong. Here's how to check.
You can pull up your cap table in ten seconds. The harder question is whether you can prove it, because there is a version you maintain and a version the government has, and they are usually not the same.
Summary
- You hold three ownership records: the spreadsheet, the statutory register of members, and whatever the MCA has been told. They start drifting about eighteen months in.
- The recurring breaks are money taken before shares were issued, transfers done over email without a stamped SH-4, certificates never delivered, and an SHA whose restrictions were never copied into the Articles.
- Ten minutes of reconciliation now is cheaper than the same work done in front of an investor with a signed term sheet and a closing date.
You can pull up your in about ten seconds. Most founders can.
The harder question is whether you can prove it. There is a version of your cap table that you maintain, and a version the government has, and they are usually not the same.
That gap does not matter on any normal Tuesday. It matters exactly twice: when an investor's lawyer asks for your records, and when a buyer's diligence team checks those records against the numbers you showed them. Both times you are explaining the difference under a deadline, with money on the table.
Here is what actually goes wrong, and how to test your own records before someone else does it for you.
You have three cap tables, not one
- The spreadsheet. The one you maintain. Updated the day a deal is agreed.
- The register of members. Your company's official ownership record, required from the day you incorporate under section 88 of the Companies Act, 2013. This is the one that legally counts. Entries are meant to be made within seven days of the board approving an allotment or a transfer, not rebuilt later from memory.
- The MCA record. What the government has, built from every allotment return and annual filing you have made over the years.
In theory the three match. In practice they start drifting about eighteen months in, because you update the spreadsheet instantly and the other two whenever someone remembers.
Think of the spreadsheet as your local branch and the register as production. If you have never pushed, they are different systems.
Where things break
You took the money before you issued the shares
This is the most common one. The money lands, everyone celebrates, the paperwork happens a few weeks later.
The rule, in section 42: money raised through a private placement has to sit in a separate bank account, you cannot spend it before the shares are issued, and you have 60 days from receiving the application money to allot. Miss that window and you have 15 days to refund it. Fail to refund and the company repays with interest at 12% a year running from the 61st day, and the money is treated as a deposit it was never allowed to take.
Then there is the return of allotment, Form PAS-3, due within 15 days of the allotment itself.
Missing one of those is normal. Missing all three in a first round is not unusual.
Someone sold shares over email
An angel sells to a new investor, they sign an agreement, you update the spreadsheet. Done, surely?
Not quite. A share transfer needs a signed and stamped Form SH-4 delivered to the company, a board resolution approving it, and an entry in the register. Stamp duty is 0.015% of the consideration, the uniform rate that has applied since July 2020. Without the SH-4 what you hold is an agreement to transfer, not a transfer. It looks fine on the spreadsheet and falls apart when tested.
Nobody ever got a share certificate
Section 56(4) gives you two months from the date of allotment to deliver certificates, and one month from the day the company receives a transfer instrument. If your early investors never got one, they are holding something that exists only in your files, and the penalty for the lapse is ₹50,000.
Your SHA says one thing, your Articles say another
You negotiated transfer restrictions, a right of first refusal and consent rights into the shareholders' agreement. Nobody copied them into the Articles of Association.
The company is bound by its Articles. If a restriction lives only in the SHA it is hard to enforce against the company, and against a buyer who never signed the SHA. Copying it across is a closing-day job that gets skipped constantly, and the weeks between signing and money arriving are when it should happen.
There is a name on the register holding for someone else
If a trust, a holding company or a foreign entity sits behind a shareholder, two declarations follow: BEN-1 from the beneficial owner within 30 days, and BEN-2 from the company within 30 days of receiving it. Almost nobody files these. It is also one of the fastest things for a diligence team to spot.
You promised equity in an email
To an early engineer. To an advisor. To a co-founder who left on good terms. It is not in the cap table and not in the register, so it does not exist, until that person appears during your next round and says they were promised 2%.
Your fully diluted number is probably too low
When you quote a price per share, the denominator matters as much as the valuation.
Fully diluted should carry every share issued, every convertible instrument at its conversion terms, the whole approved ESOP pool including the options you have not granted yet, warrants, and anything you have committed to issue.
Two things get left out most often. The ungranted part of the option pool, and old convertible notes from bridge rounds, each with its own cap and discount, each converting at a different price.
Run the conversion arithmetic before you negotiate, not after you have agreed a number.
Two things that quietly delay closings
You may not have enough shares to issue. Authorised capital is the ceiling on what the company can issue. Raising it needs a shareholder resolution, Form SH-7 with the Registrar within 30 days, and stamp duty. A simple task that becomes a two-week delay when you discover it at closing.
You may need more than one valuation. A preferential allotment needs a report from a registered valuer under the Companies Act rules. If a foreign investor is coming in, pricing sets a floor and wants its own certificate on an internationally accepted methodology. Getting the wrong certificate means doing it again. There used to be a third requirement, the income-tax view of share premium, and it fell away when the Finance (No. 2) Act 2024 abolished section 56(2)(viib) with effect from assessment year 2025-26.
How to check your cap table in ten minutes
Do this before your next raise.
- Open your register of members. If you cannot find it, that is your answer.
- Compare the total shares in it against the paid-up capital in your last annual filing.
- Compare both against your spreadsheet.
- For every round in the last three years, ask whether PAS-3 was filed, and how many days passed between the money arriving and the shares being allotted.
- For every transfer, ask whether there is a stamped SH-4 and a board resolution.
- Ask whether every shareholder actually received a share certificate.
- Read your Articles and check they contain the restrictions your SHA assumes.
- Ask whether anyone is holding shares for someone else, and whether BEN-1 and BEN-2 were filed.
- List every promise made in writing that has never been issued.
- Rebuild fully diluted, including the ungranted pool and every unconverted note.
If steps 2, 3 and 4 do not line up, you have the same problem most companies have. It is fixable, and far cheaper to fix now.
Why bother before you need to
A clean record will not get you a better valuation.
A broken one can cost you. It delays the round while you repair things in front of the investor. It gives them a reason to reopen the price. Or it turns a small paperwork issue into an indemnity you carry personally for years after the deal closes.
Across the diligences we run, cap table and register problems are the most common category of finding. Almost all of them start in the first three years, when the paperwork did not feel like it mattered yet. That is the argument for finding the problems before your investor does.
Frequently asked questions
Is a share register mandatory for a private limited company in India?
Yes. Every company keeps a register of members from the day it is incorporated, under section 88 of the Companies Act, 2013. It is the official ownership record; your spreadsheet is not. It sits at the registered office unless shareholders approve another place, and entries are due within seven days of the board approving an allotment or a transfer.
What happens if you do not issue shares within 60 days of getting the money?
You have 15 days from the end of that window to refund the money. If you do not, the company must repay it with interest at 12% a year from the 61st day, and it is treated as a deposit the company was not permitted to accept. This is one of the most common problems we find in early-stage rounds.
Does a shareholders' agreement override the Articles of Association?
No. The company is bound by its Articles. Transfer restrictions, consent rights or drag provisions that sit only in the SHA may still bind the people who signed it, but they are hard to enforce against the company, or against a buyer who never signed. Copy anything meant to bind the company into the Articles at closing.
General guidance, current as at September 2026. Forms, rates and timelines change. This is not legal advice, and you should take advice on your own situation. If you want the filing dates in one place, the compliance calendar tracks them, and our company secretarial and compliance work starts with exactly this reconciliation.
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About the author
Lead - Company Secretarial, Compliance & Fundraise Advisory
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