Adjust taxes for option exercises

What’s new

Companies can now adjust taxes for option exercises previously approved in Carta.

Legal administrators can navigate to the Exercises ledger (Transactions > Exercises) and select "Adjust taxes" within a ledger row dropdown to find the new tool:


How it works

The "Adjust taxes" tool will not be available for option exercises in the "Requested" status since option exercise approvers can adjust taxes as part of the exercise approval workflow.

For ACH option exercises already approved by the company or for company-entered manual exercises, the "Adjust taxes" tool will be available for use.

After a legal administrator selects "Adjust taxes" from the Exercises ledger, they'll see the following modal:

The legal administrator will be asked to provide a reason for the adjustment. Next, the following actions are available:

  • Un-check a box next to a tax type to remove it from the option exercise
  • Re-check a box to re-add a previously removed tax type to the option exercise
  • Update the specific tax withholding amount in the "Adjusted" column
  • Select "Add another tax type" to add a new tax type to the option exercise

Note that new tax types can't be added from this modal. If you'd like to add a new tax type to the exercise, add it first in the Tax rules page (Compliance > Tax rules) and then come back to the "Adjust taxes" tool to add it to the option exercise.

Once the adjustment has been saved, both the company and the stakeholder will see a blue banner when viewing the option grant. The banner contains information about the newly adjusted tax amount and exercise cost in addition to when the adjustment was entered in Carta:

Adjusted tax amounts will also be reflected in the "Exercised and settled report" and the "Tax withholding report" (Capitalization > Reporting).

For more information, check out the support article for the new "Adjust taxes" tool: https://support.carta.com/s/article/adjust-taxes-option-exercises

Who this affects

Private and public companies that issue option grants.

Timing

Available to all companies now.

Qualified Small Business Stock (QSBS)

What’s new

Companies using Carta for 409A will now be additionally assessed for qualified small business eligibility at no extra cost to the company.

Certificates issued by a qualified small business as determined by Carta will have a "QSBS" tag in the product to indicate that the shares represent Qualified Small Business Stock (QSBS). The goal of these tags is help stakeholders make more informed selling decisions.

The IRC’s definition of a qualified small business is restrictive yet vague and open for interpretation at the edges, so potential holders of QSBS should consult their tax advisor before making decisions to sell and claiming the QSBS tax benefit.

How it works

Based on company-provided information during the valuations process, Carta will assess the following criteria for qualified small business eligibility:

  • Company's gross assets are $50M USD or less
  • Company is an active business
  • Company is a C-corp
  • Company does not operate in excluded industries

If a company is identified as a qualified small business, a new badge will appear in the 409A dashboard:

If a stakeholder receives a certificate from a qualified small business but hasn't yet met the 5 year holding period for QSBS, they'll see a "QSBS eligible" tag in their portfolio:

Drilling into the security, the stakeholder will see some additional information about the QSBS status of the certificate:

Stakeholders who have held shares issued by a qualified small business for 5 years will see a "QSBS" tag in their portfolio instead:

Additional Resources

For detailed information about QSBS in Carta, please refer to our QSBS support article.

Who this affects

Companies using Carta for 409A and their stakeholders.

Timing

  • Available now to 50 randomly selected 409A customers
  • General availability for all 409A customers coming in two weeks

New Shareholder Experience Page

We are making it easier for companies to keep employees, investors, and other stakeholders informed about their holdings and company changes. 

Companies have historically been able to grant viewing permissions to their stakeholders via our Cap Table Sharing page and features. This experience, however, was burdensome for many company administrators who found themselves having to change sharing settings as new stakeholders were added to their cap table or existing stakeholders changed their relationship to the company, such as an employee leaving the company or an investor exiting their position.

With our new Shareholder Experience page, company administrators can designate what type of information they want to share with their different stakeholders and set rules based on these preferences. By setting permissions by rules instead of a stakeholder-by-stakeholder process, we make it easier for company administrators to get the right stakeholders the appropriate information and reflect their information sharing philosophy.

Companies can choose to enable a specific shareholder experience based on the relationship of the stakeholder to the company. For example, companies can choose what information founders, investors, employees, and former employees, and other stakeholders access on Carta. We’ve renamed, updated, and simplified our access levels to Restricted, Basic, Advanced, and Full Details. We include a “Recommended” level for different relationships (e.g. Investors = Advanced) to help guide founders and other company administrators on setting up their Shareholder Experience based on user feedback. 

We’ve also added a new rule where former stakeholders--those who no longer have an active investment or holding in the company--will automatically be downgraded to Restricted automatically. This means that as stakeholders enter and exit the cap table, their respective shareholder experience will update automatically.

New Shareholder Experience page: Group levels

We know that sometimes it’s important for company administrators to create experiences specific to a single stakeholder or user. The new Shareholder Experience feature allows companies to set overrides for specific stakeholders in the “Individual levels” tab. We also provide information on that stakeholder’s relationship and holdings information.

New Shareholder Experience page: Individual levels



To help ensure company administrators set access levels that best fit the needs of their stakeholders, our access level guide is clickable from either the Group Level or Individual Level views of the new Shareholder Experience.

Access level guide

We appreciate our users’ feedback on how to make this page clearer and easier to use. We hope these improvements save company administrators valuable time and help them mirror their company information sharing philosophy in our software.

Who is this available for?

The cap table sharing page is available currently via a limited release to select Carta companies. In the coming weeks, we will begin to allow additional companies to migrate to the new Shareholder Experience feature set. This new product is not limited by subscription tier.

Companies with the new Shareholder Experience features enabled can visit Stakeholders > Shareholder Experience. 

If you’d like to enable the new Shareholder Experience page for your company, you can also contact us.

Instant KYC for Non-Individual LPs Completing Subscription Documents

Non-individual Limited Partners who complete subscription documents on Carta can now be KYC’ed instantly.

What’s New

This release is a follow-up to our KYC for Individual LPs feature. If your fund leverages Carta’s KYC/AML service and you have non-individual Limited Partners (LPs) completing subscription documents in Carta, these LPs can now be instantly KYC’ed on the platform. Carta instantly KYCs the LP's control person and beneficial owner(s) in addition to the LP entity itself.

Carta’s instant KYC feature is made possible by Carta integrations with identity and verification databases like LexisNexis, Ekata, Socure, and more.


Limitations

  • For this release, only US-based LPs are supported for instant KYC. Future releases will extend support to non-US LPs


How it Works

  1. As an LP completes their subscription documents, non-individual LPs (for funds that avail of Carta’s KYC/AML service) will see a dedicated Know Your Customer section. Upon landing here, LPs will first be asked if their control person and beneficial owner(s) are all US persons - 





  2. If the control person and beneficial owner(s) are all US persons, then the LP will be shown forms to enter KYC information for these individual(s) -






  3. Finally, the LP is also able to upload any entity formation documents and photo IDs here:



  4. Once subscription documents are signed by the LP, the following are instantly KYC'ed: the LP entity, control person, and beneficial owner(s). If all pass KYC, this is immediately reflected in the Carta UI and General Partners are notified to countersign -


    Timing: Rolled out to all on Aug 31, 2021

    Audience: US-based Limited Partners, General Partners


[Early Access] Live Chat Support

Carta now offers Live Chat Support to Early Access Users. 

Who does this affect?

Law firm users and companies in Carta Launch 

What’s new?

Users can now opt to chat live with a Support Agent, in addition to the traditional Phone and Email Support. 

They can simply access the Help Center by clicking on the dialog balloon at the bottom right of the screen, where the Live Agent option will be available. 


After accepting the terms and conditions, the user will be connected to a specialized Support Agent. 

This rollout builds upon Carta's investment in a modernized approach to how our customers receive assistance in-app, enabling easy access to multiple engagement types to fit the context of the question, including: 

  • Chat
  • Voice and video
  • Co-browse
  • Screen-sharing 

All within the Help Center in-app! 

Instant KYC for LPs Completing Subscription Documents

Limited Partners completing subscription documents on Carta can now be KYC’ed instantly.


What’s New

If your fund leverages Carta’s KYC/AML service and you have Limited Partners (LPs) completing subscription documents in Carta, these LPs are now instantly KYC’ed on the platform. 

Carta’s new instant KYC feature is made possible by Carta integrations with identity and verification databases like LexisNexis, Ekata, Socure, and more.


Limitations

  • For this first release, only individual (as opposed to entity) LPs are KYC’ed. Future releases will support KYC for entity (non-individual) LPs as well. This includes KYC for the LP entity, LP control person, and LP beneficial owners
  • For this first release, only US-based LPs are supported. Future releases will extend support to non-US LPs


How it Works

  1. As an LP completes their subscription documents, individual LPs (for funds that avail of Carta’s KYC/AML service), will now see a dedicated Know Your Customer section. Here, LPs can input the additionally required information for KYC -


  2. Once subscription documents are signed by the LP, the LP is instantly KYC’ed. If the LP passes KYC, this is immediately reflected in Carta and General Partners are notified to countersign -


    Timing: Rolled out to Limited Partners on July 1, 2021


    Audience: Limited Partners, General Partners

ISO 100K Dashboard

Get the transparency you need to manage ISO/NSO splits with the new ISO 100K dashboard in Carta.

Who this affects

All Carta customers can now access the dashboard under Compliance > ISO 100K.

What's new

The 100K rule for ISOs has been a historically opaque concept in Carta - customers and their legal counsel have often found it difficult to understand how the application of the rule results in the specific bifurcation of ISO vs NSO shares in a particular option grant.

The new ISO 100K dashboard brings a new level of transparency to the way in which ISO options are bifurcated according to Carta's automatic application of the 100K rules. For specific transactions and amendments that fall outside the purview of Carta's automatic bifurcation estimates, customers and their legal counsel can request access to the dashboard's grant editor feature, which allows legal administrators to change the ISO/NSO split estimated by Carta.

Last thing to mention: we worked closely with Orrick (one of Carta's law firm partners) to make sure we were solving this problem in a way that allowed our law firm partners to better support our customers. You can read more about that here on Carta's blog.

Timing

Available now to all Carta customers.

Deal Documents on Carta

Fund managers are flooded with troves of documents for every investment their fund's make. These documents house vital terms that need to be quickly referenced during deal negotiations and potential exits to answer questions like- Who has blocking rights? Keeping these documents organized and easily accessible is also key to running a stress free audit that institutional LPs can have confidence in. 

What’s New 

For our early access group, funds using the Carta General Ledger can now see their deal documents directly on their realtime SOI. For each portfolio company, easily access documents by asset including both new investments and the supporting documentation for subsequent valuation updates. 

How it works

1. Work with the Carta team to capture all deal documents

2. Click through any asset on the realtime SOI

3. See all associated deal documents and valuation support

4. View or download the actual documents to verify any needed terms. 

5. Have your Carta Fund Administrator grant your auditor access to the Carta General Ledger so they can access any documentation/support the same way.


Stay tuned as we roll this out to a bigger audience and introduce more tools to make keeping track of deal terms across a portfolio even easier. Reach out to your account manager if you would like to be considered for early access. 


Timing: Rolled out to Carta Fund Administration early access clients April 2021

Audience: CFO'sFund Managers, AuditorsGeneral Partners


Private Options International Exercise- Supporting 3rd party money transfer payments

Non-US optionholders at US private companies will now be able to send exercise payments to Carta from 3rd party money transfer providers such as Wise(formerly known as TransferWise), Revolut, Xoom, Remitly etc.

We are giving optionholders the flexibility to either send payments through 3rd party money transfer providers or through wires initiated from banking financial institution.

Who this affects:

Non-US optionholders at US companies, when international exercise via wire feature is enabled by their company

What was the problem:

When we launched the ability for optionholders to wire exercise funds to support in-app money movement, optionholders were hit with bank fees, including intermediary fees, which led to holders underfunding or overfunding their exercises.

Sometimes, optionholders had to walk to a bank to wire the exercise funds as some of the banking financial institutions did not support online wire transfer.

What’s new: 

Optionholders can use the same payment instructions provided after an exercise is approved and send funds via 3rd party money transfer providers. 

Ensure that under "Recipient gets"  in 3rd party money transfer providers you input exact USD funds required for exercise payments. If amount required for exercise does not match with received funds, exercise will be underfunded and we will require remaining funds to complete the exercise.

Once Carta receives exact funds, we initiate outgoing payment to the company. After payment to the Company is succeeded, we generate Certificate.

This feature is an additional payment option that Carta is providing for our customers


Timing:

LIVE for companies that have exercising and settled via Carta feature turned on.

If you would like to have this feature added, contact Carta support!

Health Check Dashboard [Early Access]

The Health Checks Dashboard allows you to identify, understand, and take action to fix data inconsistencies in your Carta account. It is currently rolling out to select customers under “Early Access”.

This article focuses on the following topics

  • Who can access the dashboard
  • Where to access the dashboard
  • How to navigate the dashboard
  • How to fix a health check error
  • FAQs



Who can access the dashboard

You must be a Company’s Legal Administrator, Company Editor, or Company Viewer to see the dashboard. Note that Company Viewers do not have the ability to edit company data, and will only have view-access to the dashboard. Learn more about permissions.



Where to access the dashboard

via the Company Summary Page

via the Company menu dropdown link


How to navigate the dashboard

Tags



Tags help you navigate to Health Checks related to a certain topic. If you select more than one tag, checks that apply to any of the tags will be displayed below.



Tabs



Required: Shows Health Checks that require attention as soon as possible and may post a transaction risk if not addressed. These reflect instances where bad data can propagate to other nodes in the Carta network is not address promptly


Recommended: Shows Health Checks that can improve the Carta experience and ensure different Carta experiences reflect consistent values.


Dismissed: Shows Health Checks that have been dismissed by users. Certain Health Checks will flag issues that may be expected discrepancies, from a company perspective. These will be dismissable


Health Check Cards


Each card will contain information on why a fix is important and instructions on where to fix the issue. Tooltips to the right of the title, contain guides to support articles and more details on how an issue can be addressed.


Fixing a Health Check Error


There are two types of Health Checks- ones that can be fixed by a company user and ones that require a Carta team member to make the underlying changes.

If a Health Check error has a modify action, you will be able to address the issues on your own.

For other health checks, we may recommend that you reach out to Carta Support to process the data change on your behalf.


FAQs


  1. Will Carta continue to work, if I don’t address Health Check errors?

    1. Yes, Carta will continue to work, but you may see discrepancies in Carta tools and reports. We suggest that you address required issues as soon as you can to ensure Carta works smoothly.
  2. Can Carta fix the data issues for me automatically?

    1. We take your data integrity very seriously. As such, we want to ensure all changes to data are reviewed and verified by an account owner. In some circumstances, we’ve improved the product to capture more data and need your help populating the new data fields.
  3. Why is it important for me to address Health Check errors?

    1. All Carta tools depend on clean and accurate data to work correctly. For example, an expense report requires vesting schedules and stakeholder relationships to be filled out correctly. 


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