Redesigned 409A Acceptance Flow


What’s new?

We have redesigned the way you review and accept your 409A valuation on Carta. This new design presents you first with a quick summary of the analysis along with a note from your analyst letting you know the next steps in finalizing your fair market value (FMV). Once you have reviewed the report, if you have any questions you can contact our team of valuation experts through the support module in the valuation review portal. Lastly, receive board approval from within or outside of Carta to finalize the current FMV on your account. 

How it Works

Once you receive an email notifying you that your valuation is ready for review, you can follow the link within that email to access the 409A ledger where you are able to review and download your valuation. Alternatively, you can navigate to the page within Carta at Compliance > 409A Valuation.




Review your valuation

From the 409A Ledger, once you select ‘Review 409A report’ you will be directed to the valuation review portal. Here you will find an overview of the analysis performed and the concluded FMV along with a note from your valuation analyst informing you of next steps and noting any details within the report that warrant extra attention. Once you have reviewed the analyst’s note and valuation summary, you can download the full report or access the support module from the valuation review portal to access support articles or get in touch with our team of valuation experts. 


Get board approval

Now that you have reviewed the valuation, the next step is to send it to your board for review. You can do so using the board consent feature within your Carta account to easily track acceptance from each board member within the Carta platform. Once all board members have submitted their board approval through the platform, your valuation will automatically be accepted on Carta. If you got approval outside of Carta, that’s great too, simply select ‘My board has approved’ to accept the valuation to finalize the current FMV in your account. Once finalized, the new FMV will be visible to your option holders on Carta.




Payment Status Updates

What’s New

The Payment Status Updates on the Exercising workflow provides users a more accurate reflection of the status of their exercise during the money movement step of the exercise. Error messaging will now provide a single failure message clarifying what caused their exercise to become stuck during the money movement step of the exercise including errors around cancelation requests, bank account removal, and insufficient funds in the bank account.

Who this affects

All users exercising for private companies on Carta.

How it works

Today, users can view the status of their exercises in progress on the Holdings page and with the new Payment Status Update feature, these exercises will now display an ‘Error’ bubble beside the active step when the exercise gets stuck. Clicking the ‘View details’ button will navigate the user to the Exercise tab on the Option grant modal with user instructions to help resolve their stuck exercise. 

On the Exercise tab, error messaging will provide user action to contact their company admin through the Option grant modal’s Report Issue tab, to contact Carta Support through the chat, or update their bank account information on the Payment Information page. 


83(b) Automated Submission

What’s New

Users that choose to early-exercise will now be able to submit an 83(b) form automatically to the IRS while exercising. Furthermore, users can now update their SSN, digitally sign the 83(b) form, and review personal information during the exercise request. In addition, users now have an improved UI to access the PDF and tracking number of their 83(b) form on the 83(b) Elections tab on the Option Grant modal.

Who this affects

Any US-based users with early exercisable option grants, and ACH eligible who choose to early-exercise through Carta. 

How it works

83(b) Automated Submission Option During Exercise Request

The 83(b) Automated Submission option will be available during an exercise submission. Users will be able to choose between performing an Automated 83(b) Submission or a Manual 83(b) submission (if the user selects to submit their 83(b) form manually, they still have the option to utilize the automated submission feature through the Option grant modal as long as the current date has not exceeded 25 days from the exercise date).  







Figure 1: On the Review Tax page, users now are given the option to automatically submit an 83(b) form or manually submit the form; If the user chooses to submit the automated 83(b) form, they can add/update their SSN directly






Figure 2: Updated Sign and Submit modal which includes an Automated 83(b) Submission Agreement section signed via digital signature.


Figure 3: Updated Congratulations page stating that the 83(b) form is being sent to the IRS. 



Figure 4: 83(b) elections tab on the Option Grant modal to view the USPS tracking number and the submitted 83(b) form.  


Included Personal Information

To submit an automated 83(b) submission, a Social Security Number (SSN) is required by the IRS to properly verify the identity of the user. If the user’s SSN isn’t filled in the Account settings, users have the ability to add and confirm their SSN when selecting their submission method. Otherwise, when users navigate to the Review Exercise page, the automated submission will pull the user’s Name, SSN, and Address directly from the Account settings.


Digital Signature

On the Sign and Submit modal (Figure 2), users agree to automatically submit the 83(b) form by signing the agreement via digital signature. The digital signature is added directly into the PDF of the 83(b) form.

Status of submission 

The 83(b) form PDF and Tracking number will be provided and displayed in the Option grant modal on the 83(b) Elections tab. The user will be able to track and check the status of their 83(b) Automated Submission.

83(b) Manual Submissions

Manual 83(b) Submissions UI has been improved on the 83(b) Elections tab providing users with an 83(b) form to print and sign which is to be mailed manually by the user. To complete their manual submission, users will be required to upload their signed copy of the form in addition to the date that the 83(b) form was sent to the IRS on Carta. Further, users may choose to submit an automated submission on the 83(b) Elections tab.



FAQ

1. Can I still use the previous workflow for 83(b) Submission?

Yes! If you would prefer to file your 83(b) form manually, you still have the ability to do so! During the exercise workflow, you may select “Submit an 83(b) form later” as your submission method, and you’ll have the option to download and print an 83(b) form from the 83(b) Elections tab on the Option grant modal.


2. What happens if my exercise gets stuck or canceled?

If you select automated submission of your 83(b) election, it will be initiated immediately after you finish submitting your exercise.  If your exercise gets canceled, you should consult with your legal and tax advisors on what to do with your filed 83(b) election form.

3. How will I know that the IRS has received my automated submission? Will I be able to closely follow the progress of the 83(b) submission?

You can navigate to the 83(b) elections tab on the Option grant modal to verify the status of the 83(b) form using the tracking number provided by USPS to follow the progression of your 83(b) submission. Status updates are available as soon as the package is delivered to the USPS.

We highly recommend printing and storing the online USPS confirmation as this information is only available for a limited amount of time. 



Additional Resources

409A Ledger Redesign

What’s new?

We have redesigned the 409A Ledger Page where you come to request and review the 409A Valuations of your company and enter the Fair Market Value (FMV) of your company’s options. The goal of this refresh is to help you navigate the valuation process with ease and access resources quickly whenever you need assistance. 

With this updated design you will quickly and easily identify where you are in the valuation process and what to expect next. Carta is here to help you along the way with curated support articles and a variety of options to get in touch with us if you have questions not covered within the articles.

How it Works

Under Compliance > 409A you will find a number of new features designed to help you navigate the Carta Valuation process with confidence.

Valuation Status Tracker

The Valuation Status Tracker at the top of the page clearly indicates where your company is in the valuation request process. Whether you are in the middle of completing your request, if your draft is ready for review or if you are anywhere in between, the tracker will let you know what your next step is as soon as you land on the 409A Ledger page. Also included are tools and support articles to help answer common questions that you may have based on where you are in the valuation process.



Review and accept your valuation

Once you have received your valuation, you can download it for review directly from the Valuation Tracker on the 409A Ledger page. After you have had a chance to review the report and are ready to accept, you will be directed to the final step in The Valuation Tracker, the acceptance workflow. 



Get in touch with our team

Have a question? Navigate to our Support Module on the page and select the contact method that works best for you, our team of experts will follow up with a response typically within 1 business day.



Viewing your 409A Valuations

Now that you have completed the valuation process, your most recent valuation will be displayed at the top of the table at the bottom of the page along with any previous valuations saved to your Carta account. If you have any questions for our Valuation team in between valuations, simply navigate to the new 409A Ledger Page to access our Support model to get in touch with our team of Valuation Experts.




Account Recovery Measures

Who This Affects

Users without a verified secondary email address

What’s New

Additional emails are required to assist users with providing a secondary login credential in case access to their primary email address is lost. As part of our efforts to improve our clients' account security, we are updating the process of adding and verifying your additional email address. 

As part of this release, we will be notifying all users without a verified additional email address to add or verify the email they have listed. This subset of users will be receiving an email notification, as well as an outstanding task in their Carta account’s task manager. 


Timing

  • This update is available to 25% of randomly selected Carta users
  • General availability for all users by the end of Q2

Capital Calls on Android

General partners now have the ability to view and track capital calls from the Carta Android app. Investment firms can now track the progress of on-going and completed calls along with investor details, on the go, straight from the Carta mobile app.

Who this affects

  • Fund administration clients

Supported platforms

  • Android (Previously available on iOS)

What's new

Fund Administration clients can now access their capital call details and investor information from the Carta Android app.

  • The home screen now provides a summary of active capital calls with the ability to view individual call details.
  • Navigating to a capital call allows you to view further call and investor details along with a full investor list which can be filtered by Paid and Unpaid calls.
  • The Fund Details page now also provides a capital summary and the ability to view a list of Active, Drafted, and Completed calls.


Cashless Exercising on Mobile

Carta users will now be able to perform a Cashless Hold Exercise and Cashless Sell Exercise on the mobile app. 

Who this affects

  • Public Markets Users

Supported Platforms

  • iOS and Android

What’s new

Users with holdings in public companies on Carta will now be able to exercise and sell their shares via a Cashless Hold or Cashless Sell transaction while on-the-go through the Carta mobile app. These features were previously available to users via desktop, and this launch closes the previously existing gap in functionality between the Carta web experience and the Carta mobile app. 


Web-Login on Mobile

Carta mobile app users will now be able to login using a web-browser on iOS and Android. Web-login gives us the benefits of browser-based authentication, and better security, without disrupting the user experience.

Who this affects

Employees and Investors

Supported Platforms

iOS & Android

What’s New

In an effort to bring login and authentication together across all Carta platforms, we are launching browser-based login on mobile. The web-login experience will use Safari on iOS and a default browser on Android.



Revamped Employee Onboarding Experience

Employees registering their account on Carta for the first time can now provide their personal information as part of the onboarding process to complete their user profile. 

Who this affects?

Employees who have been issued ISO/NSO option grants or Restricted Stock Units and are registering with Carta for the first time. 

What’s new?

With an objective to provide insightful experiences, we’ve revamped the employee onboarding process to allow users to complete their user profile. Every employee registering with Carta for the first time to accept their first RSU or ISO/NSO option grant will now have the ability to provide the following information:

  • Personal details such as name, date of birth and country of citizenship 
  • Tax ID 
  • Address

Capturing these details upfront allows employees to be transaction ready for events such as exercising.

 

After successfully completing their user profile details, users will be directed to the Tasks page where they can accept their security.  

Timing

  • Available now to 20% of randomly selected Carta customers 
  • General availability for all Carta customers coming by the end of Q2

Disqualifying Disposition Report - Private Companies

What’s new

Private companies can now report the complete list of all ISO dispositions and see exactly which dispositions qualify for tax incentives and which ones do not, along with Ordinary Income value and other information.

How it works

Under Capitalization > Reports, find the Disqualifying Disposition Report (ISO):

Select the reporting date range, acknowledge the report’s use of in-platform securities and transactions, and then export the report to Excel:

When the report finishes generating, it will be available in the Downloads menu:

The report shows info on Disposition Type, Ordinary Income, FMV and more. In order to be completely transparent, Excel formulas are used for Disposition Type, Ordinary income, First Qualifying Disposition Date, and Disqualifying Reason fields to show how they are calculated:

Who this affects

Private companies with tender offers or secondary ISO transactions captured in Carta.

Timing

Available now for all Private market customers (the Public market Disqualifying Disposition Report is available at request as part of the Early Access release).

Additional resources

For more information around the Disqualifying Disposition Report and underlying data, please refer to this support article.

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