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

Notifications for Qualified Small Businesses

What’s New

Users with holdings in companies identified as Qualified Small Businesses (QSB) will now be notified of the potential tax benefit. Carta determines QSB eligibility when performing a 409A valuation and email notifications will be sent to all users associated with the company once the valuation is accepted. In addition, vesting emails will include information about the qualified small business stock (QSBS) tax benefit.

Furthermore, users can now find a banner in the company overview page within their portfolio that informs them about QSBS eligibility, linking to a blog post to learn more. Finally, users will be notified if their exercise qualifies for QSBS once they submit an exercise request.

Who this affects

US Companies using Carta for 409A valuations that are QSBS eligible and all their stakeholders, prioritizing “Vested” option holders. 

How it works

Email notifications

Emails are sent to all users associated with a company that qualifies as a QSB. If Carta determines the company is a qualified small business, emails are sent once the 409A valuation is accepted. Extra emails are sent to all users each time the company’s valuation includes eligibility. 

Vesting emails

Vesting emails will now include information about QSBS eligibility to help make a more informed decision about exercising. 

Company’s overview page

A banner informing users of the QSBS Eligibility Tax Benefit can be found next to the company’s name in their portfolio. This banner appears for companies identified as qualified small businesses, including information about the potential tax benefit from exercising and the expected timeframe of the company’s eligibility. 

Exercise submission message

Upon submitting an exercise request, the Congratulations page will inform users that the shares are QSBS-eligible. It summarizes the conditions and links to an Equity Education article to learn more (highlighted in red).

Timing

  • General availability for all 409A customers by the end of Q1

Additional Resources

Portfolio Overview Redesign

Users with holdings in private and public companies can now view their holdings details directly from the Portfolio screen for easy access.

Who this affects?

Shareholders with holdings in private and public companies.

What’s new?

With an objective to provide insightful experiences, we’ve redesigned the Portfolio Overview screen to surface important holding details for each company. This redesign introduces usability enhancements by eliminating extra clicks and effort required to find the information needed to view and understand equity. 

We know things like the quantity of option grants, vesting schedule, and values of securities are some of the most important metrics to have top of my mind when reviewing your portfolio. In the Portfolio Overview, each private company card will now present the following information with the ability to view further details when clicked:

  • Details of your holdings in each company and their vesting schedule 
  • Summary of your securities
  • Current FMV if you have holdings in the company or have exercisable options 
  • A vesting progress bar highlighting the number of options exercised in comparison to the amount granted 

Each public company card will now present the following information with the ability to view further details by clicking on the company name:

  • Market Value
  • Total number of shares held
  • Total holdings value
  • Net holdings value

Carta Web now has Section 6039: Form 3922 tax form generation

What's new? 

Carta Web now supports the generation of Form 3922 for Employee Stock Purchase Plans in the Company Administrator view. Companies that would normally have access to the Compliance tab, can now request access to Section 6039 from their Customer Success Managers. Form 3922 forms are due to stakeholder portfolios by January 31, 2022. By enabling this functionality in Carta Web, administrators are now in control of the Form 3922 generation and distribution, similar to Form 3921 for Incentive Stock Option Exercises.

NOTE: This feature can be enabled upon request from companies that have an Employee Stock Purchase Plan.

From the IRS:

Corporations file this form (3922) for each transfer of the legal title of a share of stock acquired by the employee pursuant to the employee's exercise of an option granted under an employee stock purchase plan and described in section 423(c) (where the exercise price is less than 100% of the value of the stock on the date of grant, or is not fixed or determinable on the date of grant).

How to Use

  1. To generate Form 3922, navigate to Compliance > Section 6039.
    NOTE: TCC is not required to generate Form 3922 Copy B for employees.
     
  2. Click Generate.
     
  3. Select the Effective Year of the report.
     
  4. Review any missing information, check off the box to confirm company data, then click Next: add contact info. If any information is missing, complete the information, then return to this stage.
     
  • If Company tax data is not complete:

    1. Navigate to Company > Settings.
    2. Click into the Profile tab.
    3. Enter Tax ID, TCC (required to generate Copy A, but not required for Copy B) and address.

  • If Stakeholder tax details are not complete, update missing data under the Stakeholder details tab of the same Form 3922 page

    1. The names, addresses, and SSNs can be edited individually by clicking Edit to the right of the stakeholder’s row.
    2. The stakeholder details can also be updated in bulk via Stakeholders > All stakeholders page. Review these instructions to bulk update stakeholder details.

 

5. If the missing data was entered in, return to the Compliance > Section 6039 page and click Generate to click through the steps to proceed and add company contact information. The company contact is formatted into the electronic Copy A .txt file that will be uploaded to the IRS site.


Click Generate Form 3922 to begin the generation of the files.

 

6. Refresh the page after some time if you see a spinning wheel or navigate away and return later.

 

7. Once generated, click Download reports for the tax year to download a .zip file to your local drive that contains all necessary data for Copy A (efile), and Copy B (statements).

 

The .zip file will be split out into the following three files:

  • efile will be a specially formatted electronic .txt file.
    NOTE: Do not edit this file. Only download and upload to the IRS FIRE site. If any data needs to be updated, repeat the initial steps for the same filing tax year to regenerate the reports and download the updated files.
     
  • statements should be delivered to all holders who acquired stock through an ESPP by the January 31st deadline and can be delivered electronically on Carta by clicking the link to Deliver participant statements

 

For any filing questions, contact your tax advisor. 


Who this affects

Public and Private Market companies with an ESPP. 

Timing

This feature can be enabled on demand by reaching out to our support team or Customer Success Managers.

What's Next

The product team will be enhancing Form 3921 functionality to bring it more in line with the new Section 6039 admin experience.   

Improved Public Exercising Experience

Option exercising with Public companies is now easier than ever. 

The exercising experience for public companies has been improved. The exercise request is now a coherent workflow guiding users through each step and providing key information about the exercise. With this detail, users can be more confident with their selection at each step of the exercise request. If there are issues with the exercise, clearer banners explain how Carta calculates share amounts and market prices.


Who this affects: 🇺🇸 Public US companies

What's new:

  • New experience for exercise requests:

    • Added explanations of exercise transaction methods
    • Clearer confirmation of address and payout method
    • Improved order details with indicators on maximum eligible options and clear explanation of order types
    • Incorporated review of taxes withheld and reminder of potential for additional taxes owed at end of the year
    • Summarized the exercise request clearly laying out the cost and transaction details so users understand what will be needed 
  • Cashless exercising reflects issuer imposed trade limits

Action required: No action required

Timing: Released to 100% of all public companies on Jan 24, 2022

IFRS Initial Release - Financial Reporting

What’s new

Companies using our newest version of the financial reporting tool can now report following International Financial Reporting Standards (IFRS). 

This is the first release of our IFRS reporting that includes:
1. Tranche based valuations
2. FIN28 amortization
3. Correct relationship valuation methodology (differs from US GAAP)
4. Stakeholder country field added to reports
5. Disclosures
6. Stock-based compensation expense journal entry
7. Report error validations specific to IFRS reporting

Later releases will include:
1. In-app custom assumption overrides
2. Forfeiture rate by grouping

How it works

When going to create a new expense scenario, there is now an additional step where users can select which reporting standard they want that scenario to follow. Users have the ability to create multiple scenarios to support both IFRS and US GAAP.

Once the scenario is created users can create both SBC expense reports and disclosure reports that follow the standard and give supporting calculations. 

Who this affects

Private and public companies using our new financial reporting tool. 

Timing

Available for legacy V1 IFRS users and beta customers. If you have a customer that is interested in being a beta user, reach out to Jess Carthey via slack. 

GA will begin with the second release which includes in-app custom assumptions. 

1099B Cost Basis Report available to Company Admins

What’s new?

We are releasing a report to all Private Market companies for administrators to review their certificate cost basis and original acquisition dates. This report will allow administrators to view cost basis data prior to the delivery of 1099B tax statements to stakeholders by mid-February.

How it works

This in-app report is available by navigating from Capitalization -> Reporting -> Form 1099b cost basis report.

Administrators will be able to view columns like stakeholder details, certificate ID's, quantity of shares sold, date acquired (original acquisition date), proceeds, gain/loss, and including various cost basis fields: 

  • cost_basis_total_certificate = full value going back to the original certificate
  • cost_basis_per_share = cost basis of total certificate / total shares quantity
  • cost_basis_sold_certificate = cost basis per share X sold shares quantity

From this report, Issuers can identify which certificates need to be changed and/or excluded from tax filing, and will have the opportunity to correct the data until late-January.

Who does this impact?

This report will be available to individuals with role permissions of Company Admin, and including Company Editors.

What’s next?

In the next month, Carta's Liquidity team will be reaching out to ensure that data has been reviewed and is considered approved by Issuers for generating 1099B statements. Stakeholders will be able to access tax statements in their portfolios by mid-February.

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
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