Additional Checks for the ISO 100k Limit

Carta now automatically checks for the ISO 100k limit in additional workflows and features across the app.

For companies issuing incentive stock options (ISOs), the IRS states that an employee cannot receive more than $100,000 USD worth of ISOs that become first exercisable in a given calendar year. 

Based on some inputs (FMV, number of options granted, etc.), Carta automatically detects whether or not any grants for a given stakeholder are in violation of the ISO 100k limit. If any ISO grants are in violation of this rule, Carta will automatically change the award type from ISO to ISO/NSO:

Carta already runs this automated check any time a new award is issued. We've added this automated check in a few more places, so companies will no longer need to work with Carta staff to manually run the check when making common types of award modifications.

Lastly, we're also working on a new feature that will help companies better manage their ISO/NSO split grants.

Stay tuned!

Bulk Add Stakeholders

Carta now supports adding multiple stakeholders in bulk.

Previously, adding new stakeholders to Carta was done on an individual basis within the Stakeholder ledger -- Manage Stakeholders > Add stakeholder. While this works perfectly well for a single stakeholder, it becomes time consuming for multiple stakeholders. For this reason, we’ve released a new Bulk Add Stakeholders feature. Here’s how to use it --

  1. Go to the Stakeholder ledger - Manage Stakeholders > Bulk Add Stakeholders. You will see something that looks like this -

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  1. Use the “Download spreadsheet” button to download a blank xlsx file where you can input all your new stakeholder information
  2. Fill in the xslx spreadsheet with your new stakeholder data. These will typically consist of recent employees who have joined your company
  3. Go back to the Carta app to upload the spreadsheet containing the changes
  4. Click the “Submit updates” button, and if there are no errors found with the data, you’re done! If there are errors, you will see a screen similar to what’s shown below. Click the “Download errors spreadsheet” button to download an annotated spreadsheet that calls out the errors.

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  1. Correct the errors in the resulting spreadsheet, re-upload the updated sheet, and submit the changes again. That should be it! The new stakeholders contained in your file will now be added as new stakeholders in Carta.

Voiding fully approved board consents

Legal admins can now mark a previously approved board consent as “Void”. Voided board consents will no longer be visible to the company’s admins or board members; however, for data integrity purposes, the data will be preserved in Carta’s audit logs.

Note that board consents approving 409A reports or new option grants cannot be voided, as those cap events are linked to the consent itself. If an admin requires assistance with a consent of this nature, they should work with Carta Support.

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PWERM Valuations, In-app

We’ve released a new feature that helps our staff value late stage private companies. The feature allows staff to conduct a “PWERM” valuation in-app, eliminating the need for them to rely on excel spreadsheets and saving them time on your 409A or ASC 820 valuation.

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PWERM stands for Probability Weighted Expected Return Method. This methodology is often relied upon in the valuation community when there is a possibility of several future outcomes for the Company being valued. For example, Airbnb has said its resuming plans to IPO. However, real world events could come up, such as a global pandemic, that could stall these plans. Due to this uncertainty, a PWERM valuation methodology could better simulate real world outcomes where companies could either continue business as usual or could reach an exit event.

Exercise Status Snapshot

After an equity holder has submitted an exercise, they can now easily see the status of an exercise request from their Portfolio Holdings page.

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To see additional details about the exercise, equity holders can click ‘View details’ to see relevant information about their exercise request.

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Updated stakeholder termination reminder for repurchases

The repurchase workflow will no longer remind users to terminate the stakeholder if the stakeholder’s already been terminated in Carta.

Unvested shares from equity grants are typically repurchased from stakeholders once they’ve been terminated in Carta. The recently released repurchase workflow was reminding users to terminate the stakeholder even if the stakeholder was already terminated in Carta. We’ve updated the workflow so that the blue reminder text and “Terminate stakeholder” button only appear if the stakeholder to which the certificate belongs hasn’t yet been terminated in Carta.

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Thank you to the Carta admin users who reached out and provided this product feedback. Please continue reaching out and letting us know how we can make the product better for our corporate customers.

Public Company Exercise Ledger

Carta public company administrators can now view and approve exercises through our public company exercise ledger.

Carta’s public company exercise ledger and public company RSU settlement tool can now be found under Transactions.

While administrators will still be able to approve exercises via Tasks, this new ledger gives a consolidated view of pending and approved exercises.

Start by clicking on Transactions and select Exercises:

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The administrator is led to a ledger containing exercises to be approved. These include cashless type exercises as well as cash exercises.

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Clicking the righthand caret will bring up the approval and tax review flow:

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From here, the admin is able to review/update taxes if necessary, and approve the exercise.

Auto-populating the Rule 144 date for certificates

Carta now automatically populates the Rule 144 date for certificates issued as a result of an exercise.

For Carta’s corporate customers domiciled in the United States, Carta will automatically set the Rule 144 date for certificates issued as a result of an exercise to be the recorded date of the exercise.

For more information about the Rule 144 date, check out the Rule 144 date support article in the Carta Support Center.

This is a simple improvement that will save time for Carta users and applies to exercises completed on Carta using our online exercising feature as well as any off-platform exercises reflected using our offline exercise workflow.

A special thank you from Carta’s product teams goes out to Carta’s law firm users for recommending this improvement.

Keep them coming!

Improved payment experience for private option exercise companies and employees

Goal: Create a cohesive, consistent, and transparent payment experience for US private company admins and employees

Audience: Private company admins and employees

What’s new:

Increased transparency on money movement status:

You can access the new Payment Information page two ways:

Employees:  Account -->Payment Information

Company: Company--> Settings--> Payment information

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One place for all cash balances:

Cash Balance shows net funds in your Carta Cash balance account. It accounts for pending deposit and pending withdrawal.

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Increased flexibility when adding bank accounts:

You can now add multiple bank accounts to your payment accounts page.You can access payment accounts from both the payments information page and from the option exercise flow in the web experience.

You can also connect your bank account instantly via Plaid. If you do not see your bank account listed in Plaid, you can still connect bank accounts manually.

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Better payment tracking and record keeping:

You can now see payment history for your payments made for an exercise. For each payment received at Carta, we provide two legs of the transaction: Funds received from source account to your Carta cash balance account and funds sent from your Carta cash balance account to the destination account. We also provide the status of those funds along with estimated timelines.

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International Exercising on Mobile

We’re releasing an update to the iOS and Android apps to support Options Exercising via Wire transfer! International option holders of private US companies can exercise through Carta via wire transfer. When a company enables this feature, option holders can initiate and track their exercises within Carta and pay for their exercise via wire transfer.

To begin, you will need:

  • An ISO, NSO, or ISO/NSO split option grant

Once you’ve installed the latest version of the Carta app, you can head to the option grant that you intend to exercise. If exercising is available, you can tap on the “Exercise” button to begin.

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Confirm your country of residence to help guide you through the appropriate exercising steps. It is recommended that you consult with a tax professional or personal financial advisor before exercising to help determine if exercising is right for you.

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Once you confirm your country of residence, you’ll now be able to:

  • Choose the number of option grants you want to exercise
  • View the payment information required for your exercise
  • Ensure that your portfolio profile information is up to date

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Once you’ve fulfilled all of the requirements needed for exercising, ensure that you read the terms of your exercise. You can do this by reviewing all linked documents before submission. Once you’re ready to submit an exercise request, tap the “Exercise” button.

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After you submit your request, the issuing company will approve your exercise. Your company’s approval will then allow you to access wire instructions within Carta via the ‘Wire funds’ task in-app, or through your email.

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Once payment has been confirmed by the company, a certificate will be created. This certificate will be signed by the officers and sent for you to accept. You’ll receive email updates from us as your option exercise progresses.

Note: Carta does not wire funds. A wire transfer must be completed outside of Carta, and through your banking provider.

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