How conversion ratios are applied in Carta

Unless fractional shares are enabled for your company in Carta, fractional share amounts will always be rounded down. This rounding occurs at the individual certificate level to maintain cap table consistency when applying the conversion ratio.

1. Per Certificate Calculation: Each certificate’s share count is multiplied by the conversion ratio. Any resulting fractional shares are rounded down.

2. Aggregation After Truncation: Once truncation is applied at the certificate level, the totals are aggregated for both stakeholder-level and share class-level cap tables.

3. Why This Approach is Necessary: If shares were aggregated first and then converted, fractional shares would appear at higher levels, causing mismatches between stakeholder and share class totals.

What is the difference between authorized, outstanding, and fully diluted shares?

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