How to Migrate Your Share Register (Cap Table): A Step-by-Step Guide

Migrating a share register (or share book or cap table) can seem like a daunting task, especially when you factor in different formats and technologies. Whether you’re moving your share register from an Excel sheet, professional software, intermediated securities in a banking system, tokenized shares on a blockchain, or even physical share certificates, this guide will help you navigate the process efficiently.

Let’s break it down based on where you’re starting from, providing clear steps, important tips, and best practices for a smooth migration.

1. Migrating from an Excel File

Many companies maintain their share book (“cap table”) in Excel when starting out. While it’s flexible, Excel becomes difficult to manage as you grow, and it often lacks security features. Remember, it was not Bill Gates’ greatest invention to store millions of shareholdings in an editable spreadsheet.

Steps:

Review Your Excel File: Ensure the file is up to date with all the necessary information (e.g., shareholder names, share classes, issuance dates, share quantities, vesting schedules).
Clean Up Data: Look for inconsistencies, such as duplicate records or missing information. This step is crucial to avoid errors in your new system.
Prepare for Import: Our software allows for direct Excel import. Make sure your data is formatted according to our specifications.
- Important legal documents to double-check:
  - Notary deeds
  - Declarations of Assignment
  - If applicable, share purchase agreements
Conduct a Test Import: You can start with a small sample of data to ensure everything migrates correctly.
Verify and Reconcile: After importing, cross-check the data between Excel and our sandbox (“preview”) environment to ensure accuracy. Fix any discrepancies immediately.
Go Live: Once the data is verified you can move your data to production. Your shareholders will automatically receive a welcome email.

💡 Tip: Take the opportunity to review your data. For example, do the data entries match the legal documents?

2. Migrating from Cap Table Software

If you’re already using an “Excel-on-Steriods” cap table software, e.g. for your ESOP, but are switching to Aequitec, the process involves fewer manual steps but still requires attention to detail.

Steps:

Export Data: Use the export function from your current platform to generate a CSV or compatible data file.
Check for Export Completeness: Ensure all key data is exported, including:
- Shareholder Details
- Equity types (e.g., stock options, preferred shares)
- Share rights (e.g., liquidity preferences)
- Legal share type (e.g., certificate, uncertificated security, uncertificated register security)
- Custody location (e.g., company, shareholder, bank securities account)
- Vesting schedules (e.g., cliff and vesting interval)
- Transaction histories
Align with Aequitec: Ensure you discussed your requirements (e.g., tax reporting, regulatory compliance).
Import Data into Aequitec: Use the import function to upload your CSV or data file.
Conduct a Thorough Audit: After the migration, cross-check every major data point (e.g., total shares outstanding, number of shareholders) to ensure accuracy. Does it match to the commercial register entries?
Get Stakeholders Involved: Notify shareholders if they need to register or verify their details on Aequitec.

🔄 Bonus: Migrating from a CapTable software to Aequitec can also be a chance to review our features to streamline workflows and to redefine roles and responsibilities.

3. Migrating from Intermediated Securities (Banking System)

For companies managing their share register through intermediated securities within a banking system, migration is very simple.

Steps:

Align with Aequitec: Plan ahead and define together a good migration date.
Coordinate the Transfer: Aequitec will initiate the transfer with your issuer agent and coordinate the re-registration with all custodian banks.
Notify Shareholders: Inform shareholders about the migration. Ask them to provide consent to their custodian bank to register the shares in the Aequitec share register.

💼 Reminder: Discuss among the board a suitable migration date early on. Terminate your existing contract early as the termination periods are usually very long.

4. Migrating from Tokenized Shares on Blockchain

Tokenized shares are marketed as a cutting-edge form of securities management, but moving them to Aequitec is extremly difficult if you do not have access to the smart contract.

Steps:

Understand your status quo: Understand which shares are issued as uncertificated register securities (“tokenized shares”) and which ones not. Document the smart contract address and review your registration documentation.
Important legal documents to double-check:
- Notary deeds
- Declarations of Assignment
- If applicable, share purchase agreements
- If applicable, mint and burn documentation records
- If applicable, registration document and smart contract address
Migrate the legal share package: Notify your shareholders that you will burn the share on the blockchain and create a new record in the Aequitec software, one-to-one. If you cannot burn the shares you may have a significant problem and need expert legal advise.
Execute the Migration:
- For blockchain to traditional: You may need to “burn” tokens and issue traditional shares in their place.
- For blockchain to blockchain: Deploy the new tokens and initiate a swap. This is only possible if you have access to the smart contract.

💬 Communication Tip: Ensure the migration process is communicated clearly to all stakeholders, especially shareholders. Align with the Aequitec team to provide frequent updates, and offer easy-to-understand instructions to shareholders on any actions they need to take.

5. Migrating from Physical Share Certificates

If your company has issued physical share certificates, migrating to an electronic share register is a vital step toward modernizing your share management. Physical certificates are prone to being lost or damaged and are difficult to track as your company grows. In Switzerland, many share certificates are also invalid because shareholders have punched holes in them for safekeeping.

Steps:

Verify and Gather Certificates: Ensure that all issued share certificates are accounted for. If shareholders have lost or misplaced their certificates, you may need to issue replacements or work with legal counsel to manage the situation.
Record Certificate Details: Collect and digitize the key information from each certificate, including:
- Shareholder name
- Number of shares
- Certificate number
- Date of issuance
- Share class
Manually Enter Data: Input the data from each share certificate into Aequitec. Ensure accuracy, as this information will serve as the basis for all future equity management.
Notify Shareholders: Once the migration is complete, inform shareholders of the transition to the Aequitec platform and provide them with access to their updated holdings.

📝 Important: Keep the voided physical certificates or appropriate legal documentation as backup records, especially if required by law or company policies.

Key Takeaways

Planning is Key: No matter the starting point, having a clear migration plan is essential to avoid errors.
Data Accuracy: Always clean and verify your data before the migration to avoid costly mistakes down the line.
Test First: Whether you’re working with software, intermediated securities, or blockchain, conduct a test migration before fully committing.
Involve Stakeholders: Shareholders and other stakeholders should be notified in advance and given clear instructions if their involvement is needed.

🔍 Final Thought: Migrating away from a cap table visualization tool is more than just moving data; it’s about ensuring continued compliance, transparency, and data accuracy as your company grows. Taking the time to follow best practices will save you headaches later and keep your shareholders and employees happy!

All articles Published: Oct 21, 2024