Capital Restructuring

Overview

The Capital Restructuring tool allows you to modify your company's share class structure and redistribute issued shares without changing the total authorised capital. This process is often used to introduce new share classes, adjust existing ones, or reorganise ownership for corporate actions such as funding rounds or preference share allocations.

What you'll learn:

• How to restructure authorised capital across share classes
• How to manage issued shares and conversions during restructuring
• How to use conversion ratios to reclassify shares
• How to review and confirm restructuring changes

Before You Begin

Before starting a capital restructuring, ensure:

• The effective date of the restructuring is after the most recent transaction (e.g., allotments, transfers, or previous capital actions)
• If you need to increase or decrease the overall authorised capital, perform a separate capital action before starting the restructure
• All share class and nominal value changes align with corporate approvals or board resolutions

Performing a Capital Restructuring

Step 1: Restructure Authorised Capital

1. Navigate to Share Classes and select Capital Restructure
2. Adjust the authorised shares or nominal value of existing share classes
3. Add new share classes if required, specifying their authorised shares and nominal value
4. Ensure the total authorised capital matches the original amount (Balanced Status)

Balanced vs. Unbalanced Status

The platform tracks whether your restructuring is balanced:

• Balanced: Total capital equals the pre-restructure total. All authorised capital has been allocated across share classes
• Unbalanced: A message will show the amount remaining to allocate. You must allocate all authorised capital before proceeding

Step 2: Manage Issued Shares

For each shareholder, specify how their existing issued shares will be treated:

Option 1: Keep as Is

• Shares remain in their original share class
• No conversion or reclassification occurs
• Use this when shareholders' holdings should stay in the same share class

Option 2: Convert

• Move shares into a new or modified share class
• Define the conversion details:
  • Shares to Convert: Number of shares being reclassified
  • Conversion Ratio: The rate at which old shares convert to new ones

Understanding Conversion Ratios

The conversion ratio determines how shares are reclassified:

• 1:1 Ratio: Each old share converts into one new share
  • Example: 100 old shares → 100 new shares
• 2:1 Ratio: Two old shares convert into one new share
  • Example: 100 old shares → 50 new shares
• 1:2 Ratio: One old share converts into two new shares
  • Example: 100 old shares → 200 new shares

Step 3: Review and Confirm

Before completing the restructuring, review the following summaries:

1. Authorised Capital Summary: Shows the updated share class structure with new authorised shares and nominal values
2. Share Conversion Summary: Details of shareholder movements, including which shares are being converted and the conversion ratios applied
3. Post-Restructuring Ownership: Table showing the final ownership structure after all conversions

Verification Checklist

• Verify that total authorised capital matches the original amount
• Check that all issued shares have been accounted for (kept as is or converted)
• Confirm conversion ratios are correct for each shareholder
• Review that ownership percentages are accurate in the post-restructuring table
• Ensure the effective date is correct and after all previous transactions

Once confirmed, click Complete Restructuring to apply changes.

The capital restructuring has been recorded. All share classes have been updated, issued shares have been redistributed, and the company's capital structure reflects the new configuration.

Understanding Capital Restructuring

A capital restructuring allows you to reorganise your company's share structure without changing the total authorised capital. This enables you to:

• Create new share classes with different rights or preferences
• Modify existing share classes
• Convert shares between classes
• Reorganise ownership for corporate actions

Key Effects of Capital Restructuring

• Share Class Structure Changes – New classes can be added, existing classes modified
• Issued Shares Redistributed – Shares can be converted between classes using conversion ratios
• Total Authorised Capital Unchanged – The overall authorised capital remains the same
• Ownership May Change – Conversion ratios can affect the number of shares held, potentially changing ownership percentages
• Certificates Updated – Share certificates are updated to reflect the new share class structure

When to Use Capital Restructuring

Capital restructuring is useful for:

• Introducing preference shares for a funding round
• Creating different share classes with varying rights
• Reorganising ownership structure for strategic purposes
• Adjusting share classes to align with new corporate requirements
• Converting between share classes as part of corporate actions

Practical Example

What Happens Next

After completing a capital restructuring:

• All share classes reflect the new structure with updated authorised shares and nominal values
• Issued shares have been redistributed according to your conversions
• Share certificates are updated to reflect the new share class assignments
• The cap table shows the updated ownership structure across all share classes
• The capital history records the restructuring transaction
• Company records, registers, and filings are updated to reflect the changes

Related Topics

• Capital Actions Overview – Learn about other capital actions you can perform
• Change of Authorised Capital – Learn how to change total authorised capital before restructuring
• Setting up Share Classes – Understand how share classes work
• Cap Table – View how capital restructuring affects ownership visualization