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.

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.

Introducing Session Types for Tax Advisory


What's new

Employees who have access to Carta Tax Advisory through their employer may now choose from up to four different tax advisory session types. This aims to provide transparency and flexibility so you can have the conversation that's right for you. 

Who this affects

US-based employees subscribed to Carta Tax Advisory through their employer

How it works

Scheduling a session

Log in to your  Carta employee account, navigate to the Tax advice tab.

From there, click on "Book a free session" to browse different session types. 

Once you're on the session type selection page, you'll see a brief outline on how to schedule and a selection of three to four different session types. 

Select the session type that's right for you and click "Schedule free session" to book a time with a tax advisor. 

If you're not quite sure where to start, we recommend starting with the "Understand equity basics" session type to learn about your equity and taxes at a high level.

Note: The "Discuss tender offer participation" session type only appears if your company is currently undergoing a tender offer. 

Preparing for a session

Session types: Discuss tender offer participation | Create tax scenarios

Once you've scheduled a time to speak with a tax advisor, you'll be prompted to upload a few documents. Tax advisors will create personalized tax scenarios using this information so you can have the most accurate tax picture. 

If you don't have these documents on hand now, you can skip this step for later. However, you must upload documents at least 24 hours before your session so advisors have enough time to prepare. 

After uploading your documents, you're ready for your session. 

You'll receive a calendar invite with a zoom link to attend your session at your scheduled time. You can also see this information in your tax advice tab in Carta, with the option to reschedule or cancel using the "View details" button. 

Session types: Ask a quick question | Understand equity basics

Once you've scheduled a time to speak with a tax advisor, there's nothing else you need to prepare ahead of your session.

You'll receive a calendar invite with a zoom link to attend your session at your scheduled time. You can also see this information in your tax advice tab in Carta, with the option to reschedule or cancel using the "View details" button. 



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.
 

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.




New Hire Onboarding for Tax Advisory

What's new

New hire onboarding allows new hires to access their Carta account before they receive and accept their equity grant. By creating a stakeholder record for the employee, employees receive an email to register for a Carta account. This grants them access to Carta Tax Advisory.

If you do not add new hires they will need to wait to accept their equity grant in order to access Carta resources, which can take several months to approve and issue. 

New employees often have questions about their equity as soon as they join a company, Carta Tax Advisory gives them access to dedicated 1:1 support from equity tax experts from day 1 to help them understand their equity packages. 

Who does this affect?

Companies subscribed to Carta Tax Advisory

US-based employees (new hires) at companies subscribed to Carta Tax Advisory

How can I give new hires access to their Carta account?

Important notes before starting: 

  1. The new hire onboarding process only applies to companies subscribed to Carta Tax Advisory
  2. Tax advisory sessions are only available to US citizens or residents
  3. Adding an employee into Carta as a stakeholder provides them access to Carta services like Carta Tax Advisory. Ensure you only add employees you intend to issue equity to.

The Stakeholder ledger allows users with Company editor or Legal administrator permissions to view and modify information for a person that holds multiple securities across the company 

Navigate to Stakeholders > All Stakeholders


Under the Manage Stakeholders drop-down, admins can add stakeholders individually or in bulk

Individually add stakeholders

Select “Add stakeholder” in the Manage stakeholders dropdown list



A modal will appear requesting information about the stakeholder

Required fields:

  • First name
  • Last name
  • Relationship (i.e. employee)
  • Relationship effective date
  • Add and save an address 

Tax ID, Employee ID, Payroll ID, and other address fields can be input as available, but are not required before equity grant issuance

Bulk add stakeholders

Select Bulk add stakeholders from the Manage stakeholders dropdown


Download the template spreadsheet to import stakeholders’ information, save, and upload the modified file. Carta will run a check on the data entered before saving the changes


Note: Admins should not add new columns or move columns in this sheet. They must use the template as is


Required columns: 

  • First name
  • Last name
  • Relationship (i.e. employee)
  • Relationship effective date (MM/DD/YYYY)
  • Country (3 digit) 
  • State (2 digit)

After the updated xslx sheet is uploaded, click “Submit changes” and a confirmation modal will appear

Confirm to complete stakeholder creation


Carta Closings

What’s New

We revamped the entire limited partner (LP) experience of our closings product. Built with the feedback of the 20,000 LPs who have already closed on Carta, we’re excited to release Carta Closings, providing LPs the quickest and easiest way to subscribe to a Fund or SPV. 

How it Works

Carta Closings guides LPs through the subscription process and ensures that all LPs, from first-time investors to experienced institutions, have a smooth experience.

Improvements include:

A Shorter & Smarter Questionnaire

A typical investor questionnaire contains dozens of questions, most of which are irrelevant to a majority of LPs. We reduced the time your LPs will spend on subscription documents by building a smarter workflow that adds or subtracts questions based on LPs responses to previous questions.

Guided Support

Investor questionnaires can contain legal and industry terms that are confusing to some LPs. Now, LPs will see a dynamic in-app sidebar that defines these terms and provides answers to frequently asked questions throughout the questionnaire. 

Pre-Filled Investor Questionnaire

Once an LP fills out Carta’s Investor Questionnaire, their information is saved and will be auto-populated for all subsequent entities they subscribe to. This allows returning LPs to subscribe to new entities in seconds. 

Additional improvements: 

  • Forwarding subscription agreements: LPs can easily forward the documents to another individual to complete on their behalf, like a wealth manager or assistant. LPs will be notified when the documents are ready for their final review and signature.
  • Integrated data room: Carta Closings allows you to share fundraising documents with LPs at any time during the subscription process through our secure data room. Plus, LPs will be able to access their data room at any point during the subscription process. 
  • Wiring instructions & capital calls: Display wiring and initial payment instructions to LPs (optional) as soon as they submit their documents, and have your initial capital call automatically shared once the LP has been admitted to the entity. 
  • Instant KYC: Built directly into Carta Closings, receive instant KYC/AML compliance checks for your LPs (optional). 
  • Pre-filled W-9s: For U.S.-based LPs subscribing as individuals, Carta can now pre-fill a W-9 for them to review and e-sign. The W-9 is pre-filled based on the information the LP already provided as part of their subscription.

See how it works:

Who this affects

Carta Closings is an optional, free product available to all fund administration clients raising new funds or SPVs. 

More Resources

Support Article for LPs
Support Article for Fund Managers
Request a Demo

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
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