Introduction
A share decrease transaction reduces the number of shares a stakeholder owns in your company. This typically happens during share buybacks, share cancellations, or when shares are returned to the company for other reasons.
This article explains when to use share decrease transactions and how to record them in Ledgy.
Who can decrease shares: You need to be an account admin in Ledgy to create share decrease transactions.
When to decrease shares
Record a share decrease transaction in situations such as:
Share buyback - Your company repurchases shares from a stakeholder
Share cancellation - Shares are formally cancelled according to board resolution
Forfeiture - Unvested shares are forfeited when an employee leaves
Share surrender - A stakeholder voluntarily returns shares to the company
Capital reduction - The company reduces its share capital by cancelling shares
Important: A share decrease reduces the total number of outstanding shares in your cap table. This is different from a share transfer, which moves shares from one stakeholder to another without changing the total share count.
How to decrease the number of shares?
Go to Ownership > Transactions > Decrease shares
A window will open, and you can define the details of the share issuance transaction.
Fill in required fields
A modal window will open where you need to enter the essential information:
Stakeholder
Select the stakeholder or legal entity whose shares are being decreased
You can choose from existing stakeholders in the dropdown menu
Share class
Select the share class of the shares being decreased
Choose from existing share classes in the dropdown
Date
Enter the date when the share decrease occurs
This should match the effective date in your legal documentation
Number of shares
Enter the number of shares you want to decrease
Below the input field, Ledgy displays the available number of shares that can be decreased for this stakeholder and share class
You cannot decrease more shares than the stakeholder currently owns
You can include additional details to provide context for the transaction:
Stakeholder beneficiary: A beneficiary is an economic beneficiary behind a legal entity. You can view the cap table regarding legal or economic distribution if beneficiaries are set. This can also be used in Ledgy to manage pooled investments.
Custom Field:
Please see the following article if you wish to connect custom fields to your Ledgy account.
Internal note: If you want to add any note related to the transaction
Documents
Attach relevant documents such as buyback agreements, board resolutions, or cancellation certificates
Select existing documents from the dropdown or upload new files
Save the transaction
Click the Save button to finalise the share decrease transaction.
The transaction will be recorded in your cap table, reducing the stakeholder's share count and the total outstanding shares for that share class.
What happens after decreasing shares
Cap table updates
When you record a share decrease:
The stakeholder's share count is reduced by the specified amount
The total outstanding shares for that share class decreases
Ownership percentages are automatically recalculated for all stakeholders
The transaction appears in your transaction history
Stakeholder view
If the stakeholder has portfolio access in Ledgy, they will see the share decrease transaction in their transaction history, showing the reduction in their holdings.
How to edit share decrease transactions?
Go to Ownership > Transactions
Search for the share decrease transaction, click the three dots, and then on Edit.
This allows you to make changes in the decrease share transaction.
Click on the Save button to confirm the adjustments.