Introducing Agreement Execution for issuing new interests

What's new?

You can now generate fully executed legal agreements when issuing interests with Carta LLC.

What's important or valuable about this change?

With the new Agreement Execution functionality, you can simplify the end-to-end issuance workflow, increase efficiency, and auditability:

  • Set up interest agreement templates and automatically populate them with data from Carta, such as each interest holder's information, interest type, number of units, and more
  • Send these interest agreements to the holder to collect their signature directly on the PDF
  • Save the fully executed agreement in Carta with the interest so you and the interest holder can access it for audits, personal finance, or tax use cases

What do I need to do?

To get started with Agreement Execution, you will need to first work with our team to set up a new interest agreement template. Get started by navigating to Documents > Templates.

 

Request a new template by clicking on the button on this page.

You need to provide us with the following items to set up a new template:

  • An interest agreement template document in .docx format

    • Include a line for where the holder should sign
    • Include a pre-populated company signature, if applicable (Carta does not populate any signatures besides that of the holder)
  • A list of fields for Carta to auto-populate in the document

    • Today, we can populate any issuance and holder data and certain data relevant to the account and entity

Once your template has been set up, Carta Staff will notify you and you can use it to issue new interests. Watch our demo video to learn more.

How do I learn more or get help?

For more information on interest agreement templates, please read our support article.

RSU Settlement for Private Companies

What's new?

Carta now helps private company administrators coordinate the settlement of Restricted Stock Units (RSUs). The end-to-end offering allows an Issuer to:

  • configure and schedule a RSU Settlement;
  • provide RSU holders with an election period to identify how they want to pay the tax withholding obligation associated with the upcoming settlement;
  • collect any cash payments from RSU holders; and
  • automatically update the cap table at settlement.

During the election period, RSU holders are invited to access a workflow to view their vested RSUs along with the tax withholding amounts due at settlement. They have the flexibility to meet their tax obligation by electing to net-settle, pay the full amount in cash, or use a combination of surrendered shares and cash. 

This offering helps facilitate the RSU settlement process from setup to share delivery for private Issuers that award RSUs under their equity compensation plans.

How does it work?

Issuers

Private company administrators can go through a four-step process to configure an upcoming RSU Settlement with Carta Liquidity. Issuers can:

  • set the parameters of the settlement (e.g., FMV, election timing, settlement date); 
  • view and confirm the RSUs that will be included based on the vesting end date (i.e., record date); and 
  • view and confirm tax withholding amounts associated with the settlement. 

Issuers can set rates to use when calculating tax withholdings owed based on each RSU holder’s tax jurisdiction(s). Carta Liquidity’s integration with Carta’s equity management platform and tax engine eliminates the need for the administrator to pull and sort cap table information manually or calculate tax withholdings for each RSU holder. Alternatively, Issuer’s can provide tax withholding amounts calculated by their HRIS provider for use in the settlement.


RSU holders

When the administrators invite RSU holders to submit their elections, RSU holders will be able to view which of their RSUs will be settled and the tax withholding amount due per security. In addition, individuals will identify how they would like to satisfy the tax withholding amount owed through a self-service election workflow. 


The three tax withholding payment options include:  

  • Share withholding (i.e., net settlement) - The entire tax withholding amount is paid by surrendering a portion of shares from the vested RSUs released for settlement. The net amount of shares after withholding will be delivered to a RSU holder at settlement. This is the default option.
  • Cash payment - The entire tax withholding amount is paid by a RSU holder in cash (only USD is accepted). RSU holders are required to fund their brokerage account in order to make this election.
  • Share and cash payment - Each RSU holder identifies the mix of cash and shares that will be used to pay the taxes due at settlement, providing them more flexibility. RSU holders are required to fund their brokerage account in order to make this election.

For any cash elections, RSU holders are instructed to transfer the necessary cash to their Carta Liquidity brokerage account*. RSU holders are able to modify their election until the end of the election period. 

At settlement, Carta Liquidity’s integration with Carta’s equity management platform automatically updates an Issuer’s cap table to reflect the shares of stock delivered to RSU holders, and any cash payments received to cover applicable tax obligations will be transferred automatically to the Issuer’s brokerage account. RSU holders will then receive their resulting equity from the Issuer in their Carta accounts. In addition, Carta Liquidity will provide a record of the RSU settlement to both the Issuer and RSU holders. 

Run regular RSU settlement processes with automatic cap table updates and tax withholding calculations, saving your team time and resources 

The RSU Settlement offering will:

  • Reduce the manual administrative work required to set up a regular cadence of RSU settlement through equity management and tax engine integrations
  • Provide RSU holders flexibility to choose how they would like to meet their tax withholding obligations through a self-service election workflow
  • Provide optionality to RSU holders to pay out of pocket for the amount they feel comfortable paying.

Start managing RSU Settlements on Carta!

Reach out to company_coverage@cartacapitalmarkets.com to speak with your relationship manager to turn on this feature. 

*Note: Brokerage accounts and other brokerage services are offered through Carta Capital Markets, LLC (Member: FINRA/SIPC)


Customize cap table views

What's new?

Admins now have the ability to sort the interest type columns in cap table views.

What's important or valuable about this change?

You have one more option to customize the cap table view to your preferences. You can now sort the interest type columns in the cap table views to reflect how you want to view and export data.

What do I need to do?

On the cap table views page, click on Columns. You can show, hide, or rearrange the interest type columns by dragging and dropping them in the order you want. Within each interest type, you can also show or hide specific columns.

Any changes you make to the interest type columns in cap table views will also be reflected in the export.

How do I learn more or get help?

For more information, visit our support site.

Data room usability enhancements

What's new?

Admins can now download data rooms, update access permissions, and view a complete activity log to see who is viewing files stored in your data rooms.

What's important or valuable about this change?

  • Download data rooms. You can now download each data room as a zip file and maintain the folder and file structure, allowing you to share these files with anyone who doesn’t have access to Carta.
  • Update access permissions. Review and update who has access to a data room. You can easily remove access from anyone you previously invited to a data room with, whether they accepted the invite or not.
  • View an activity log. See a history for each data room, folder, and file,  including views and downloads. This is especially useful if you have shared a data room for due diligence with potential investors because you can gauge their interest.

What do I need to do?

To download a data room, navigate to the menu on the right side of the data room and click Download

To update access permissions, navigate to Manage data room > Manage sharing. You can see who the data room was previously shared with and can remove their access.

To view the activity log, navigate to the menu on the right side of the data room and click View activity

This can also be done at the folder or file level, showing a filtered list depending on where the activity log is accessed from.

How do I learn more or get help?

For more information, visit our support site.

Introducing estimated values for equity

What's new?

You can now enable estimated values for interests. Carta can automatically calculate and provide estimates for vested, unvested, and outstanding values as well as threshold gain or loss for profits interests, and MOIC.

What's important or valuable about this change?

You can demonstrate the value of equity to interest holders, including employees, investors, board members, and advisors. They can see estimated values for their interests in their Carta portfolio.

There are multiple values available for you to choose from and each value includes information on how it is being calculated, which improves transparency.

You have the flexibility to choose whether you want to calculate estimated values at all, make the values visible to Admins only or to Admins and interest holders.

What do I need to do?

Equity value estimates are based on the latest per-unit value. A per-unit value can come from a Carta 409A valuation or company Admins can manually input values obtained from other sources, such as a board determination or a recent fundraising round.

Add estimated value while creating a new Interest Type

Complete the flow until you reach the section Estimated value.

Click on the drop-down Visible To to select who should be able to view the estimates. Note that you have the ability to determine whether only company administrators will have access to the estimates or if holders will also be able to see them.

Add estimated value while editing an Interest Type

Under Interests and interest types, click on the interest type and on View interest type details.

Click on Edit on the right side of the Estimated values section.

Click on the drop-down Visible To to select who should be able to view the estimates.

Estimated values will be visible to interest holders in their Carta portfolio.

How do I learn more or get help?

For more information, visit our support site.

Off-Platform Payment Settlement (Capital Markets)

What's new?

Carta Liquidity now offers more optionality when paying transaction proceeds following a tender offer or other private secondary transaction. Issuers can now elect to have proceeds for one or more sellers be paid outside of the Carta Liquidity platform via a third-party (including the Issuer). Below are several use cases that Carta now supports:

  • Proceeds paid through an Issuer’s payroll;
  • Proceeds paid to a seller’s trust account for distribution to beneficiaries; or 
  • Use of a third-party paying agent to distribute proceeds.

How does it work?

During the setup phase of a transaction, an Issuer can elect to have the transaction proceeds for one or more sellers paid off-platform. The Issuer will inform Carta which participants should receive their proceeds off-platform, and the transaction’s Offer to Purchase (OTP) will describe the method by which participants will receive their net sale proceeds. 

At settlement, Carta will deposit proceeds for participants not selected for off-platform payment into their Carta brokerage accounts. For a company repurchase (share buyback), no further action is taken by Carta for the balance of the proceeds as the Issuer will be responsible for the distribution through payroll or otherwise. In the case of a third-party tender offer, Carta will send the balance of the proceeds to the Issuer to handle the distribution to the remaining sellers.

At the close of the transaction, the total amount of money distributed by Carta or a third-party will be recorded in the Transaction Summary Report for the Issuer and the Trade Confirmation for each seller.

(a) Issuer Transaction Summary Report

(b) Trade Confirmation

(c) Statement Cycle Report

Distribute tender offer sale proceeds off-platform through payroll or other means for more payment flexibility

The off-platform payment settlement feature will:

  • Increase an Issuer’s flexibility in determining how transaction proceeds will be paid to sellers for secondary transactions; 
  • Reduce tax withholding and reporting complexity when Issuers choose to leverage their payroll system to distribute proceeds and withhold taxes; and
  • Make it easier for employee sellers that receive proceeds through payroll to contribute those additional funds to their 401k’s or other automated savings plans.

Reach out to Carta to get the process started

Do you want to run a tender offer or other private secondary transaction with a fully-integrated cap table experience? Reach out to Carta Liquidity’s Corporate Coverage team at company_coverage@cartacapitalmarkets.com to figure out the best path towards liquidity. 

Note: 
1. Brokerage accounts and other brokerage services are offered through Carta Capital Markets, LLC. Carta Capital Markets, LLC is a member of FINRA/SIPC.

Dilution Report (Public Markets)

What’s new? 

Public company administrators can now run a Dilution Report to help them calculate their company’s diluted earnings per share (EPS). The Dilution Report will contain the simple and weighted average of common stock outstanding (WASO), the number of incremental shares, the average trading price for common shares, and supporting information for all calculations. This feature will simplify diluted EPS calculations and help public companies meet their diluted EPS reporting requirement for their quarterly income statements.  

How does it work?

To calculate diluted EPS, an Issuer will need the WASO and shares outstanding (new common shares issued at conversion - repurchased shares) for the reporting period in question. The Issuer will calculate its own net income, preferred dividends, and after-tax cost of interest. 

Note: * denotes fields not provided by Carta

After logging into their Carta accounts, public company administrators can navigate to the Financial Reporting section of their profile to generate a new Dilution Report for a desired reporting period. Dilution reports are only available for periods that begin on or after an Issuer’s IPO date.


After the report is generated, the administrator can download an Excel file which includes calculated values for simple and weighted average of common shares outstanding, the number of incremental shares, the average trading price for common shares, and supporting information. The file also includes an “Errors” tab to flag any data issues that should be resolved to produce an accurate report.

Simplify diluted earnings per share calculations to meet quarterly reporting requirements for public companies

With the Dilution Report, public company administrators can:

  • Save time and reduce the work required to calculate WASO and shares outstanding to meet public company reporting requirements;
  • Customize the diluted EPS reporting period as needed;
  • Use Carta’s calculations to verify their own calculations as a sanity check; and
  • Understand if there are any data discrepancies that need to be addressed. 


Start using the Dilution Report now!

Do you need additional help in using the Dilution Report? Refer to this support article for more information. For further assistance, reach out to Carta’s Financial Reporting team at 718@carta.com

Wire Instructions Update

What’s New

We have made UI improvements to our Wire Instructions for online wire exercises. The new UI better highlights the amount, timeline, and considerations for completing the transfer. The updates include:

  • User and exercise specific details such as grant, company, option holder, date, and amount.
  • Clearer instructions for the bank on how to handle intermediary fees with specific SWIFT payment instructions. 
  • Approval and reminder emails now show the last day for Carta to receive funds, so the exercise can be complete.

Who this affects

All international users who are exercising options via online wire. 

How it works

The updated Wire Instructions will be available in the same places as before (Tasks view, PDF, Exercise Progress view). You can see the new templates here:

Tasks view


PDF

Exercise Progress view

Email communication

Both Approval and Reminder emails show the date for Carta to receive funds.

Timing

  • Available on all online wire exercises starting 11/30/2022

Additional Resources

Support Article: Exercising Via Online Wire

Interest holder addresses

What's new?

You can now keep a record of interest holder addresses.

What's important or valuable about this change?

Gain a single source of truth with all interest holder information centralized in Carta. Admins can now input a physical address when adding a new interest holder or editing an existing one and this address can be viewed in the interest holder ledger and in the interest details.

What do I need to do?

When issuing interests to new holders, Admins can now bulk upload addresses in the interest holder spreadsheet. You will see different columns for different address fields. Upon issuing, the address will be saved on the new interest holder.

When adding a new interest holder or editing an existing one, Admins can record the address in the new Address section. Inputting the Country/Region will make the other address fields appear.

How do I learn more or get help?

For more information on managing interest holders, visit our support site.

Exercising options and warrants

What's new?

We’ve simplified Carta’s UI to help Admins exercise multiple options or warrants in one streamlined workflow.

What's important or valuable about this change?

When interest holders elect to exercise their outstanding options and warrants, you can now enter the exercises all together in Carta to reflect the transactions on the cap table. You can also issue new interests to the holders and keep a record of the transaction in the interest history.

What do I need to do?

In the interests ledger, navigate to the interests you want to exercise in the left sidebar. 

Select one, multiple or all interests.

Navigate to the Action button and select Exercise.

The new UI will walk you through exercising the interests, including:

  • Reviewing the destination interest type that this interest will settle into once it is exercised
  • Specifying the details of the interest being exercised, including the number of units to exercise and the price per unit
  • Specifying the new interest details, including the invested capital amount, issue price, and any applicable custom fields
  • Reviewing everything and confirming the exercise

After you confirm, the interests resulting from the exercise will be issued, affected interests will be updated, and cap table reports will reflect the exercises. You can also view the transaction in the interest history.

How do I learn more or get help?

For more information, visit our support site.

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