This page provides general legal information and calculation tools, not legal advice. DocketMath is not a law firm and does not provide legal representation, and using this site does not create an attorney-client relationship. Laws change and exceptions apply, so deadlines and amounts specific to your situation should be confirmed with a licensed attorney in your jurisdiction.

Convertible Note Cap Table in Delaware

Delaware’s cap table treatment of a convertible note depends on the corporation’s certificate of incorporation, governed by Del. Code Ann. tit. 8, § 151. That statute authorizes the board to fix the terms of any class or series of stock, including conversion rights, without requiring a separate class designation for the note itself. In practice, a convertible note is not recorded as equity on the cap table until conversion; instead, the note appears as a liability or a separate line item. Upon a qualified financing or maturity, the note converts into shares according to the terms set in the note and the certificate of incorporation. The worked example below illustrates how such a conversion adjusts the cap table. Use the calculator to estimate your own company’s conversion outcome.

Governing authority

In Delaware, the convertible note cap table rule is set by Del. Code Ann. tit. 8, § 151. The verified packet cites Del. Code Ann. tit. 8, § 151 (https://delcode.delaware.gov/title8/c001/sc05/index.html#151).

Delaware convertible note cap table: governed by Del. Code Ann. tit. 8, § 151. The verified packet cites Del. Code Ann. tit. 8, § 151 (https://delcode.delaware.gov/title8/c001/sc05/index.html#151).

Estimate your own result: every situation has exceptions that can change the outcome. Use the convertible note cap table calculator to estimate your specific figure.

This page provides general legal information and calculation tools, not legal advice. DocketMath is not a law firm and does not provide legal representation, and using this site does not create an attorney-client relationship. Laws change and exceptions apply, so deadlines and amounts specific to your situation should be confirmed with a licensed attorney in your jurisdiction.