Introducing international in-app custom assumptions

What's new?

Financial reporting can require flexibility. We’ve added new functionality to adapt to the reporting needs of your business with in-app custom assumption overrides.

What’s valuable about this change?

You won’t have to download a report from Carta and manipulate it in an external document. You can customize your reports right in the Carta web application, while remaining International Financial Reporting Standards (IFRS) 2 compliant. Here’s what you can customize*:

  1. Expected term
  2. Volatility
  3. Fair market value
  4. Interest rate
  5. Fair value

What do I need to do?

You can access Financial Reporting directly from your Carta account. Simply go to the Compliance tab and select Financial Reporting. You can apply custom assumption overrides after you’ve run a report within the Fair Values tab of Financial Reporting.

How do I learn more or get help?

Contact our financial reporting support team

* These customization options can be applied to tranches of an award. Users will be able to change the assumption on a tranche-level basis for a single award.

On-demand educational content for employees with Tax Advisory

What's new

Employees who have access to Carta Tax Advisory through their employer now have access to on-demand educational content in their Carta portfolio. As an employee, you have the ability to re-watch your company’s recorded webinar, as well as view chapters of key concepts about your equity. The video chapters cover topics such as exercising your option, selling your options and other important topics.


Who this affects

This feature is available to employees who have access to Carta Tax Advisory through their employer. Employees will be able to view their company's recorded webinar once it has been completed.

Where to find it

As an employee, navigate to the Learn section of the Tax Advice page in your Carta portfolio. If you have any additional questions, please schedule a session with an Equity Tax Advisor.

Third Party Audit Partner Portal has Launched

What's new?

Carta has empowered our audit partners by creating an audit partner portal that will house all relevant documents to successfully complete a fund audit. 

We have launched this portal to make it easier to organize and streamline responses to questions and requests from auditors which historically have taken time and effort to consolidate.

What’s important or valuable about this change?

Audit Partners will have one location to go to find all of our documents. Fund administrators can easily organize and check for outstanding documents. This will save time and effort for auditors and fund administrators, making the end-of-year easier for our customers by proxy.

Documents that will now be added to this list include:

  • Formation Documents / General Docs

    • LPA
    • EIN Confirmation
    • Formation Certificate
  • Partners’ Equity

    • Subdocs
    • W8/W9
    • Investor Side Letters
    • Transfers docs
  • Executed Investment Documents (Deal Docs Team)

    • Certificate of Formation / Incorporation 
    • Stock Purchase or Closing Volume, Convertible Promissory Note, Sub Doc
    • Most recent cap table
  • Bank Statements
  • Invoices missing from Journal Entries
  • Management fee and interest calculations

Fund administrators will add these to the portal or request them from customers when appropriate. 

What do I need to do?

Generally, you do not need to do anything as this will affect third -party audit partners for the most part. However, there are a few things you can do to ensure that this offering is as strong as possible:

  1. Ensure that you have selected an audit partner for your end-of-year needs.
  2. Send all of your audit-related documents (see list above) to your fund administrator. You can do this by uploading them in the app, or sending them to your FA via email.
  3. Work with both your audit partner and your fund admin on questions about these documents over the course of the end-of-year audit process. 

How do I learn more or get help?

You can ask your fund administrator or your audit partner if you have any questions. However, it is important to know that this predominantly affects your audit partner, not you as the customer. 

Have additional questions about this or are you curious about what your tax and audit partner will do this end-of-year season? Check out our VC Tax and Audit Support Article here

Performance Metrics are Now Available on Capital Account Statements

What's new?

Carta is thrilled to announce performance metrics can now be shown on the capital account statement. Fund preparers now have the ability to include performance metrics including TVPI, DPI, RVPI, and Net IRR.

What’s important or valuable about this change?

Institutional investors will use this as they require these metrics for their ILPA reports. This feature brings fund preparers one step closer to being ILPA compliant. Additionally, this streamlines access to these metrics for multiple stakeholders including customers, auditors, LPs, and more.

Depending on their strategy, users can toggle these on or off from their statements. 

What do I need to do?

You can activate this offering in seconds!

Step 1: Add it to your financial reporting template

Performance metrics on the PCAP will be auto-defaulted to be ‘off’ but can be turned on by navigating to Firm settings > Financial Reporting > Templates. From there you can create a new template or edit an existing one. On the investor’s capital page, you will have the option to include performance metrics on the capital account statements by checking the box highlighted in red.

Step 2: Review it in the financial statements

Once added to the template, preparers will go to create their next financial package. They will have performance metrics at the bottom of the capital account statements. Customers, LPs, and other stakeholders will have access to these metrics in a centralized way.

Please find a visual walkthrough of these steps below.

 

 

See example below:

Contact your account manager or fund administrator for more information or questions.

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

Capital Activity Tool

What's new?

Capital calls and distributions have historically been completed via communications directly with your fund admin outside of Carta’s Platform. This system led to potential delays due to a lack of transparency and tracking capabilities. 

Carta has now launched the new and improved Capital Activity Tool. This combines capital calls and distributions on Carta’s platform, enabling your fund admin to complete your requests easily from within while maintaining transparency and communications with you and your stakeholders.

What’s important or valuable about this change? 

Carta has reworked our capital call and distribution processes to streamline your capital to get it to where it needs to go as quickly as possible. 

 The new capital activity tool does the following:

  • Combines capital calls and distributions under one tab for your fund admin team 
  • Handles complex net events where LPs are being called and distributed value at the same time
  • Allows for distributions to use the same in-app GP approval flow that cap calls use
  • Allows for distributions to use the same pro rata math to auto-populate figures that cap calls have
  • Adds itemization support (bucketing) so journals and cap call notices can detail how much of a cap call is for expenses, fees, and more
  • Calls outside commitment are now supported 
  • Cap calls can use dynamic fields for notice building (previously distributions only)
  • The support section is now customizable on notices
  • Progress (LPs paid) figures are now accurate 
  • Tracks partial amounts from LPs

With this new infrastructure, Carta will start adding features at a high velocity. Stay tuned for improvements to in-kind support, notice customization, scheduled LP reminders, sub-close interest, and more.


What do I need to do?

Ready to use the new tool? We have launched with several test customers and are currently collecting results.


How do I learn more or get help?

Please refer to these screenshots for a sneak peek. 

You can now select from a menu of options in the Capital Activity Tool, including:

  • Capital Calls
  • Subsequent Close Call
  • Distribution
  • Custom Event 


Add a due date and the contribution event easily.


You can now select from a variety of buckets for your capital activity and decide how to allocate across investors. 



Granular data entry allows you to make sure you call and distribute the correct amount for each stakeholder. 



Track all of your capital activity in one easy location. 

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.

Tagging portfolio companies within firm investment view

What’s new? 

We’ve improved our investment tagging feature so you can easily categorize, filter, and view your investments by industry, geography, and more.

Investment tagging allows you to enter any custom KPI attached to your portfolio companies so you can personalize the information on the Investments tab of your fund dashboard. Plus, you can now easily view the performance of your investments based on KPI. 


How it works 

Category refers to the classification, like industry, while tag refers to the type of classification, like fintech.  

To apply a new tag, edit an existing tag, or create a new category, navigate to your Overview tab, then click Investments. Select “+” next to the investment you’d like to personalize.

To add a new category or a new tag (not already in the dropdown), click Manage All Tags & Categories.

To add a new category, select the dropdown next to Categories and click + Add New. Enter the category, and select Add new tag category. To remove a category, select the category from the drop down, and then click Delete category. 



To add a new tag within a category, enter the tag in the box labeled tag name and click Add tag. To remove a tag, select the trash can symbol next to the tag.


To edit a tag for an existing category, select the dropdown next to the tag, then select the new tag you’d like to apply to that investment.  



To add an additional tag or category to your investment (the tag and category must already exist in the dropdown), select + Add Another Tag. To delete an additional tag or category, select - to the right of the tag.  



Once your new category or tags are entered, click Submit. You will now see a more detailed view of your investments. To filter by category, select Filter, enter the filtering condition, and select Apply Filters. 

Who this effects

Anyone utilizing Carta’s fund administration, LP Portal, Portfolio Insights and free firm portfolio can access this feature. 



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