Meaning
The discrepancy or change between the intended or promised equity split among cofounders and the actual distribution recorded in the formal corporate documents. This difference often arises from informal agreements that were never properly formalized or updated as the company evolved. Measuring the split delta helps corporate lawyers identify and correct ownership errors before they cause disputes.
Distribution Discrepancy
Mismatches between verbal promises and written records can cause severe friction among early team members. In equity audits, the distribution discrepancy of the split delta highlights where the corporate cap table deviates from founder expectations. This identification is the first step toward correcting the allocation.
Cap Table
The official registry of shareholders must reflect the true legal ownership of the company. Corporate secretaries update these records to ensure they match current agreements and resolve any legacy errors. This update is critical before conducting any venture capital transactions.
It provides a clean, audited share register that incoming investors can rely upon with complete confidence.
Resolution Process
Correcting these discrepancies requires the unanimous consent of all affected shareholders through formal amendments. When the resolution process of the split delta is executed, it formalizes the agreed changes in a new stock purchase agreement. This formalization ensures that the equity structure is legally binding.
