Understanding Share Transfer Amounts

Understanding the difference between Investment Amount and Transfer Amount helps you maintain accurate cap table records.

Key Differences

Investment Amount: The original sum paid for shares by the initial shareholder - this preserves the record of capital paid to your company.

Transfer Amount: The specific amount agreed upon between shareholders during the transfer - this is the value exchanged between parties and doesn't affect your company's total capital.

Example

If Shareholder A bought 100,000 shares at $1 each, then transferred 50,000 shares to Shareholder B at $2 each:

• Investment Amount: $50,000 (original $1 × 50,000 shares)

• Transfer Amount: $100,000 (transfer price $2 × 50,000 shares)

This distinction ensures your cap table accurately reflects both the original investment in your company and the current market value of transferred shares.