Share register solutions: What to look for and why It matters

A share register is an overview that shows, at any point in time, who the shareholders in a company are.

What about the fully diluted cap table, and why is it critical for you to understand that term? Is a share register necessary for every company? What does it actually involve? The questions stack up fast.

Ever wondered who has access to the share register, and what it should include? More importantly, what do investors expect to find in your share register before they invest in your business?

You're not alone. This can be confusing. The good news: in this article, we'll take a closer look at what a share register formally is, what fully diluted ownership means, and what to look for when evaluating a digital solution for it. We'll cover what matters to know and why understanding the fully diluted picture is important for your business.

Let's start with the share register itself. Once you've set up your own company in Norway, the Norwegian Companies Act (aksjeloven) requires you to keep a share register. It has to be kept securely and can be maintained electronically. The register gives you a complete view of who owns shares in your company. That includes important details: name, address, digital address, and date of birth or company registration number. It also tells you how many shares each owner holds. Multiple share classes? Those need to be specified too. This information matters for you as an owner, CEO, or board member, it gives you clarity and control over the ownership of your company. (Read more about the requirements in the Norwegian Companies Act).

Access to the share register isn't limited to a few people. As a default, anyone has the right to inspect a Norwegian company's share register, except for the shareholder's digital address, which stays private.

But there's an important detail worth flagging: can a shareholder exercise all their rights before the shares are registered in the share register? Usually not. The share register has to be up to date, and a shareholder's rights can only be exercised once the acquisition is registered. That's information that directly affects you and your rights as a shareholder.

And by the way, investors care about this too. Before they invest in your company, they want to know how many shares are in circulation and how they're split between founders, employees, investors, and others. That affects your valuation and how attractive the company is to invest in. Which brings us to fully diluted ownership.

So what does a digital share register actually do for you? We know many companies still keep their share register in Word documents or Excel sheets. If you have multiple owners or different types of ownership rights, you'll need a more robust solution. What should one actually contain?

A list of today's shareholders is one thing. But a fully diluted cap table is more than just a snapshot of who owns shares today. It also shows any share rights that affect future ownership, things like convertible instruments and various employee equity incentive schemes such as options. If everyone who holds those rights decides to exercise them, the total number of shares in the company will go up, and your ownership stake will shift accordingly. A view of future share rights is essential for understanding how shareholders' stakes can evolve.

To show a fully diluted register, the system needs functionality for managing equity incentive schemes (the kind typically used for employees and sometimes the board). It also needs to handle different investment instruments and the various rights investors might hold, for example, convertible loans.

With these modules in place, you have a complete digital view of ownership, including the legal provisions that affect how ownership shifts over time under different parameters. That puts leadership and the board in a strong position to make important ownership-related decisions.

Another benefit of a complete share register is being able to keep a full transaction log of historical share transactions. Even better if all those transactions are both logged and linked to the relevant documentation (underlying agreements) in a document register. Useful in due diligence, for example, or in conversations with your accountant or auditor around reporting.

That points to the importance of good access management, giving the right level of visibility to different stakeholders. Whether it's lawyers, new investors, the board, your accountant, your auditor, employees, or existing owners. It creates a single source of truth for everyone, which means you avoid the situation where different Word or Excel files are circulating, files that quickly go out of date, are incomplete, and carry a real risk of individual errors that can lead to material discrepancies for rights holders.

Taken together, all of this means more efficient work on the share register and time saved for the CEO and CFO.

On top of the benefits above, there's also a delayed but real cost to not keeping a proper running overview. If share transactions and other agreements have happened without being updated in a complete share register, it can take time and become expensive to bring in lawyers, auditors, or others to clean up the shareholder records and rebuild a complete share register. Before a funding round, you need a clean shareholder and agreement overview. Good order makes it much easier to run a new round efficiently.

Managing ownership is complex. It involves a lot of demanding processes and tricky terminology. That's why it often gets outsourced to third parties, usually lawyers, and the costs add up quickly. There are also different rules from country to country that affect the right solution, taxation, and reporting. So a system should have decent built-in guidance and explanations of these terms, and be adapted to local legislation. That way, company leaders can get control of this themselves, efficiently and safely.

Unlisted is a Norwegian company offering a practical solution that supports all of the elements above, giving company leaders full control, simply and efficiently. It shows fully diluted ownership and the percentage split across different ownership groups. That gives company leaders the clarity and overview they need to make decisions.

Read more here: unlisted.ai/eierskapsportalen

Right now, there are no public registers that update the share register in real time. Once a year, companies have to report their share register to the tax authorities. Companies report who owns the shares and which transactions were carried out in the previous year. The register is potentially out of date the day after it's reported. So it pays off, and it's a legal requirement to keep a proper running overview in a dedicated system.

An overview of ownership in Norwegian companies is important information. It got extra attention in the media in 2023 because of events involving politicians and questions around conflicts of interest. The Brønnøysund Register Centre is now working on a solution that will make it easier to report and share share register information in real time, which depends on digital solutions like the one Unlisted offers. Unlisted is part of the project with the Brønnøysund Register Centre and will be ready to integrate with the new register as soon as it launches.

There's a legal requirement to keep your share register continuously up to date, and to report on various events at various points in time.

To have the full overview you need to make good decisions, simplify admin, and report cleanly, you need a system that does more than just list shareholders. It should support everything you might need to report to different parties, which means it also needs to handle a fully diluted share register.

A fully diluted share register shows you the future share split and how your stake can change over time, based on all the share rights that have been issued.

These two elements together form the foundation for a clear view of the present situation and of different future scenarios.

Want clarity and control over the ownership in your company? Still not sure how to go about it? We're here to help.