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? 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

Tax Withholding Estimates during Order Entry (Capital Markets)

What's new?

Sellers participating in a private market secondary transaction, such as a tender offer, on the CartaX ATS can now view their estimated tax withholdings* during the Order Entry phase. Equipped with estimated tax information, sellers who are US-based employees will be able to make a more informed decision when determining sell preferences and better anticipate their net proceeds.

How does it work?

Issuers sponsoring a tender offer or another structured transaction will provide Carta with their employees’ city, state, and/or federal jurisdictional tax rates. Carta will use the applicable tax rates to calculate their individual estimated tax withholding. 

As sellers select which of their eligible stock holdings to sell during the Order Entry period, the Proceeds Calculator on the right hand side of the screen will automatically update and calculate what their estimated net proceeds may be after fees and taxes*. 

Sellers can then click on “View tax details” (hyperlink within the red box above) to view a breakdown of the estimated tax withholdings by security type and tax jurisdiction.

Enable your employees to understand their estimated tax obligations earlier in a tender offer when placing their sell orders.

The Tax Withholding Estimates during Order Entry will: 

  • Enable sellers to see how their security elections during the Order Entry period may impact their estimated tax withholdings, and ultimately, expected net proceeds; and
  • Save Issuers time by helping to reduce the amount of questions received from sellers about their potential tax withholding obligations. 

 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 - The estimated tax withholdings is for illustrative purposes only. The withholding amount shown is only an estimate. The actual amount withheld from a seller’s proceeds may differ significantly from the amount shown. Tax withholding is not a final calculation of taxes due. A seller may have a greater or lesser tax obligation than the amount withheld by the Issuer, and the seller is responsible for determining whether and when any additional tax payments are required. 

Disclaimer: Carta, through its wholly owned broker-dealer subsidiary, Carta Capital Markets, LLC, offers a streamlined experience for executing pre-negotiated stock transfers, tender offers, and other secondary liquidity transactions. Carta Capital Markets, LLC is a member of FINRA/SIPC.

Communication Center (Public Markets)

What's new?

Public company administrators can now utilize the brand new Communication Center to send secure communications to stakeholders in the company’s equity plan managed on Carta. This feature allows public companies to create and send timely communications to equity plan members in bulk. Recipients can be selected by relationship type and other filters to further customize the message’s distribution list. In addition, the Communication Center dashboard allows company administrators to view sent and drafted messages, and see which stakeholders have viewed a communication. 

Examples of communications include, but are not limited to: instructions on how stakeholders can manage their equity at Carta, employee stock purchase plan (ESPP) offerings, upcoming trading windows, and updated disclosures.

How does this work?

Permissioned company administrators may access the Communication Center. Before sending any messages, company administrators should check that the company’s Stakeholder Ledger is up-to-date to ensure messages are sent to the correct individuals. At minimum, an individual’s Relationship, Contact Email, and Officer Code (if applicable) should be updated.

Once these steps are completed, company administrators can proceed to the Communication Center dashboard (found under the Employee tab of the main navigation toolbar).

Here, company administrators with Company Editor or Legal Administrator roles can compose, review, and send secure messages with or without PDF attachments. They can also filter for previously sent and drafted messages. 

When choosing who to send a communication to, the Company Editor or Legal Administrator may send bulk messages by Relationship Type (e.g., Employee, Ex-Employee, Advisor), and then also filter recipient lists by Officer Code, the employee stock purchasing plan (ESPP) an individual is a member of, or the security type(s) held by each stakeholder. 

Company administrators will have the opportunity to review the communication, save it as a draft, and reconfirm the recipients before sending the message. After sending the message, stakeholders will receive an email notification that they received the secure message. They must log in to their Carta accounts to view the message, and messages on the Carta platform may not be forwarded to an external email account.

Company administrators who can view the Communication Center dashboard can monitor which stakeholders have viewed the communication.  

Send secure messages and archive them safely in a centralized location with Carta’s Communication Center. 

The Communication Center allows public company administrators to: 

  • Craft and send secure communications with or without PDF attachments in bulk to stakeholders within their public equity plans; 
  • Easily create recipient lists by relationship type and other optional filters, removing the need to maintain multiple distribution lists manually;
  • Quickly filter recipient lists of sent communications by who has or has not viewed the communication; and
  • Review and archive communications to remain compliant with recordkeeping and reporting laws; 

Start using the Communication Center now!

Need help with the Communication Center? Refer to this support article for detailed instructions on how to manage, view, and send out your next secure message. 

SEC Rule 144 Affiliate Workflow Updates (Public Markets)

What’s new? 

Carta improved how public company administrators can manage and designate equity plan stakeholders as Rule 144 Affiliates. Designating stakeholders as Affiliates ensures that their trade orders get reviewed before execution through a separate SEC Rule 144 due diligence workflow and that those trades are properly captured for Form 144 inclusion. Company administrators can also now easily access and review a filtered list of Rule 144 Affiliates from their Company Summary page. 

The management of Rule 144 Affiliate status has been separated from the Officer Code workflow to simplify this process and to ensure trading blackout periods for stakeholders with certain Officer Code(s) will not be impacted by one’s Rule 144 Affiliate status.

How does it work?

Company administrators can update Rule 144 Affiliate status by clicking on “Manage Employees” on the Company Summary page. 

From there, administrators can click on each stakeholder’s record and view their current Rule 144 Affiliate status. Administrators can also track the Effective Date of when a stakeholder was first marked as an Affiliate without leveraging Officer Codes.

To designate an individual as a Rule 144 Affiliate, administrators can check the box within the Update Stakeholder flow:

For enhanced security, Carta put controls in place to prevent stakeholders from inadvertently being removed as an Affiliate. Please contact Carta Support to help remove a stakeholder’s Rule 144 Affiliate status.

Easily manage, review, and designate public equity plan stakeholders as Rule 144 Affiliates to ensure trading compliance via an improved workflow.

With the improved Rule 144 Affiliate workflow, company administrators can:

  • Easily manage, review, and designate equity plan stakeholders as Rule 144 Affiliates;
  • Be assured that Affiliate trades go through the proper reviews and are included on Form 144; and
  • Set blackout trading periods for certain Officer Code(s) without an impact to a stakeholder’s Rule 144 Affiliate status.

Start using the improved Rule 144 Affiliate status workflow now!

Do you want to update Rule 144 Affiliate status for individual stakeholders or in bulk? Refer to this support article for more information. 


Optional Sections in Carta Closings


What’s new?

With Optional Sections, a new feature of Carta Closings, fund managers now have the ability to further customize their LPs subscription experience.

Create an even faster closings experience for your investors. 

Our Optional Sections feature allows you to hide sections of Carta’s Standard Investor Questionnaire, such as Qualified Purchaser (QP) or Qualified Client (QC), that may not be relevant to your fund or SPV. You can also disable, make optional, or require LPs to provide their wire instructions for future distributions as part of their subscription.

How does it work? 

1. On the Closings tab, select Closings Details.  Then, scroll down to Customize Sections

2. From here, you can make your selections to hide, require, or make optional the  wiring instructions, qualified purchaser, and qualified client sections. Then click Save

How do I learn more?

To learn more about this feature, please reach out to your account manager. 

Have additional questions about Carta Closings? Check out our fund manager resource and LP support article, or request a demo.

Custom Questions in Carta Closings

What’s new?

We understand the questions fund managers need answered by their LPs can vary depending on the entity. With Custom Questions, a new feature of Carta Closings, fund managers and fund attorneys now have the ability to customize their LPs subscription experience, ensuring no question goes unanswered.

If Carta’s standard Investor Questionnaire doesn’t cover everything you or your attorney needs answered by LPs while closing your fund or SPV, Custom Questions gives you the ability to easily add additional questions to our questionnaire. 

How does it work? 

1. On the Closings tab, select Closings Documents, then click Edit Appendix. 

2. You’ll be directed to a Get Started screen with two options: 

Option 1: Enter questions from scratch

If you have not previously added questions to another entity, you’ll start here. For each question added, you can designate whether the question be answered by all LPs, just individuals, or just entities.

Option 2: Copy Questions from another fund / SPV

If you have previously added questions to another entity, there’s no need to enter these questions again. Click Start copying and select which questions you’d like to copy to your current fund or SPV. 

3. Enter your question and then select how the answer should be provided by your LP (short text input, yes or no, etc.)  There’s no limit to how many questions you can add, or what you want to ask of your LPs.

4. Once your questions are entered you can  preview how they will appear in Carta’s investor questionnaire. After a final review, click Submit.

How do I learn more?

To learn more about this feature, please reach out to your account manager.

Have additional questions about Carta Closings? Check out our fund manager resource and LP support article, or request a demo.



Issuer Transaction Dashboard (Capital Markets)

What's new?

Issuers running a secondary transaction, such as a tender offer, through Carta Liquidity on the CartaX ATS can now access on demand real-time seller participation data during a live transaction via the Issuer Transaction Dashboard (“Dashboard”). 

How does it work?

Issuers can access their brokerage account online and click on their live transaction, where they will see their Dashboard. The “Participation overview” tab includes three key sections:

  • Participation breakdown: The pie chart provides a summary of the transaction’s subscription rate by Relationship type. Issuers can quickly see how close the transaction is to being fully subscribed. Relationship type is determined during the transaction’s setup period.
  • Participant engagement: The bar chart details the number of sellers who (a) have been invited to the transaction, (b) viewed the transaction, and (c) decided to participate by tendering shares.
  • Relationship summary: The table summarizes the participation level across all Relationship types. Details include the participation rate, shares tendered, and the notional value of tendered shares.

The table and charts on this page will update in real-time during the live transaction. 

The “Transaction overview” tab of the Dashboard will be accessible at the close of the offering period and provides a summary of the transaction, including a breakdown of deposits made into the Issuer’s brokerage account. Issuers will be able to access and download their Trade Confirmation and Transaction Summary reports here as well.  

 

Save time and gain real-time transaction and participation data on demand with the Issuer Transaction Dashboard

The Issuer Transaction Dashboard will: 

  • Give you real-time transaction and participation data on demand during a live transaction;
  • Provide you with full oversight and enhance your foresight over the transaction’s results related to filling a buy order; and 
  • Make it easier for you to provide your team with updates on a transaction and Relationship type level, preserving the confidentiality of individual seller activity.

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. 

 

Disclaimer: Carta, through its wholly owned broker-dealer subsidiary, Carta Capital Markets, LLC, offers a streamlined experience for executing pre-negotiated stock transfers, tender offers, and other secondary liquidity transactions. Carta Capital Markets, LLC is a member of FINRA/SIPC.

Commitment Increases in Carta Closings

What’s new?

Fund managers using Carta Closings can now easily increase their LP’s commitments directly in the Carta platform. 

We made closings even easier for you and your investors 

Save time by using our new, standard template that allows you to quickly execute a commitment increase for an LP who has subscribed to your Fund or SPV. Simply enter the details of the commitment change, sign, and share with you LP. 

How does it work?

1. On the Partners tab, select the LP whose commitment or contribution you would like to increase.

2. Enter the information required on our template:

  • Manager name: The name of the managing entity for the Fund or SPV
  • LP signatory: The LP, or the contact who will be signing on behalf of the LP
  • New commitment amount: The additional commitment amount the LP will be agreeing to
  • Effective date: You have the option of designating an effective date or making the effective date the date the LP signs the document 

Then, review and sign the document that reflects the adjustment to the commitment amount. 

3. Last, your LP will receive an email notification that the document is ready for their review and signature. They can easily e-sign the document using their LP Portal.


After the LP signs, the commitment increase is automatically booked in the Carta platform. Plus, Carta will share the countersigned documents with all parties. 

Carta makes this standard template available to all fund administration and SPV customers. You must first check with your counsel to ensure this template is suitable for your needs, and that you understand the legal and regulatory implications of increasing an LPs commitment amount prior to using this feature. 

How do I learn more?

To learn more about this feature, please reach out to your account manager.

Have additional questions about Carta Closings? Check out our fund manager resource and LP support article, or request a demo.
 

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