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.

• Managing option exercising is now easier than ever. 

International optionholders of US companies can now exercise online via wire transfer to Carta. As a result, all US companies can now settle exercises through Carta, for both ACH and wire transfers payments. Carta conveniently manages payment reconciliation and payment issues such as insufficient funds or overpayments. This new feature is controlled via the new Transaction Settings page. 

Who this affects:

• 🇺🇸 US companies, public and private

What's new:

• 💸 All exercises are settled with Carta - company admins will no longer need to mark exercises as paid. No matter where optionholdersers are located, Carta will receive funding for on-platform exercises - US holders pay for their exercise via ACH and non-US holders pay for their exercise via a wire transfer to Carta.
• ⚙️ Clear transaction settings - company admins control option grant exercisability easily in one central location within Transaction Settings, under Company Settings.
• ❌ Auto-cancel unpaid exercises - A wire exercise is automatically cancelled if unfunded or underfunded for 30 days after admin approval.
• ✉️Communication with optionholders - Carta communicates directly with optionholders to resolve payment issues, letting them know of an outstanding balance for an exercise or facilitating a refund for overpayment. 

Action required: 

• Configuring Transaction Settings will enable access to online wire exercises for international optionholders.
• Navigate into Company > Settings > Transaction Settings 
• Click Set up to accept the terms and reconfigure your company account
• Accept the terms and conditions and enjoy the feature! You will be able to:
  • Change the bank account information
  • Easily turn exercises ON and OFF, without Support intervention
  • Select the types of securities that may be electronically exercised

Timing:

• Rollout begins Oct 14, 2021
• Rollout to reach 100% of all customers by the end of 2021

What if the company decides not to enable the tool?

The current company or transaction settings will not be impacted. Remember that enabling Transaction Settings is required for international optionholders to submit online wire exercises!

Resources: 

• [Support Article] Enabling online transactions
• [Release notes] Exercising as non-US optionholder

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

Whats New

We've made it easier to quickly add LPs to Carta's Closings tool. Using a new spreadsheet in Carta you can now easily input details about each LP or simply paste information from another spreadsheet or tool. 

How it Works

There's a new "Bulk add partners" button on the closings tool that will open up the new spreadsheet where you can add LPs. You'll need to fill in the following information about each LP: 

• Partner name: The name of the individual or entity that is subscribing.
• First and Last Name: This will be the name of the primary contact for the LPs commitment. The LP can always update this and add additional contacts when they’re filling out subscription documents.
• Email: The email address of the individual who will be filling out subscription documents for the partner.
• Commitment amount: The amount the LP will be committing to the fund or SPV. You must enter a commitment amount but this can be updated at any point prior to the LP signing. 

Additional Resources

Here's a support article that walks through the step-by-step process of adding LPs to the closings tool. 

Who this affects

This is now available to any fund managers using Carta's Closings Tool. Our Closings Tool gives LPs a quick and easy way to fill out Fund and SPV subscription documents. 

What’s new

Legal administrators in Carta can now partially cancel an option grant in Carta. Partially canceling an option grant will reduce the number of outstanding shares and return the shares back to the option pool.

How it works

You'll find the partial cancellation tool by navigating Securities > Equity awards and clicking on the ledger dropdown for the specific option you'd like to partially cancel:

First, you'll be asked to provide an effective date for the partial cancellation. A partial cancellation is an amendment to the option grant, and the effective date will determine when the amendment takes effect in the company's as-of date reporting.

Next, select the cancellation method, which determines how the partial cancellation will affect the vesting schedule for the option grant. Because a partial cancellation reduces the outstanding quantity of the option, Carta needs to know from which tranches the shares should be canceled.

Last in, first out cancellation method

For some situations, the issuer or their legal counsel may not specify the way in which the amendment will affect the vesting schedule. Issuers can select the last in, first out cancellation for the vesting schedule, and Carta will cancel shares starting from the future-most tranche and move up the vesting schedule until the specified quantity has been canceled.

Custom cancellation method

For situations in which the issuer or their legal counsel want to affect the vesting schedule in a specific manner with a partial cancellation, issuers can select the "Custom" share allocation method - this approach provides flexibility and allows the issuer to cancel shares from any tranche. The in-app spreadsheet allows legal administrators to first reflect the partial cancellation in a spreadsheet application outside of Carta and then copy/paste the resulting vesting tranches back into Carta.

After selecting "Review and confirm" at the bottom of the page, verify the cancellation quantity and other information to save the partial cancellation.

Additional Resources

For more information around the limitations and best practices for the partial cancellation tool, please refer to this support article.

Who this affects

The new partial cancellation tool is available to the legal administrators in all of Carta's private market customers.

Timing

Available now.

Users with holdings in public companies will now have the ability to view their holdings for both public and private companies straight from the Carta iOS app. Shareholders can now track market values, view total holdings value and more.

Who this affects

Shareholders with holdings in public companies.

Supported platforms

• iOS (Android coming soon)

What's new

With an aim to provide functional and streamlined experiences for shareholders, we’ve brought the ability to view public holdings on the Carta iOS app. Public company cards will now be present among private companies on the home screen. The following information will be displayed for each public company card with the ability to view further details when clicked:

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

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 Cap Table Access 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 group of stakeholders with a specific level of access based on their relationship 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 Cap Table Access settings 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 be downgraded to Restricted automatically. This means that as stakeholders enter and exit the cap table, their respective level of cap table access will update automatically.

New Cap Table Access 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 Cap Table Access 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 Cap Table Access 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 Cap Table Access page.

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 via a limited release to select Carta companies. In the coming weeks, we will begin to migrate additional companies to the new Cap Table Access feature set. This new product is not limited by subscription tier.

Companies with the new Cap Table Access features enabled can visit Stakeholders > Cap Table Access. 

If you’d like to enable the new Cap Table Access settings for your company, you can also contact us.

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
   
   
   

What’s new

We're updating firm permissions to be more granular for larger firms, while keeping them easy to manage for emerging managers.

Fund Admin clients on Carta will now have the ability to grant users on their accounts access to only the information they need: Investments, Limited Partner information, Fund Admin, and Fund performance data.

How it works

Admins on a VC firm account have the ability to add users and update their permissions. Permissions are controlled under Settings on a firm account. Non-admins can go to the Settings page to see who the admin on their account is.

Basic VC firm accounts on Carta will be able to grant users Admin or Investments access.

Firms that use Carta for additional services have the ability to grant users additional permissions for each fund in the firm.

Defaults

For each user, an Admin can grant them “default” access to the firm. Defaults will automatically give users these permissions for new funds that are added to the account.

Additional Resources

• Support article

Who this affects

This update affects all VC firm users on Carta. Users will not see a difference to their existing access with this change, but going forward Admins can update permissions.

Timing

We are rolling this out to a small number of firms starting on August 30 and plan to roll out to all firms within a few weeks.