Corporations  Equity Administrators New Feature 

What’s new

Public markets administrators can now  designate employee groups that require company approval before trading through Carta’s pre-clearance tool. 

Unlike blackout periods, which are in effect for sensitive time periods, pre-clearance applies at all times that the seller is configured to require it. Pre-clearance allows issuers to proactively review and approve or reject seller trade requests when the company is in an open trading window.

Who this affects

Public company administrators, and the sellers that public companies configure to require pre-clearance.

How it works

Pre-clearance populations are designated at the officer code level. Any seller associated with an officer code requiring pre-clearance (with an effective officer code as-of date) will require pre-clearance to trade.

Sellers that are associated with an officer code that requires pre-clearance will be presented with trading request instructions upon portfolio login:

If sellers are not in a blackout period and are only prevented from trading due to pre-clearance, they will be able to request the ability to trade.

After the seller submits a pre-clearance request, the seller will see a Pending status in the portfolio while the issuer reviews the trading request:

• The seller will remain in trade request pending status until the issuer grants pre-clearance.
• Upon request, the issuer receives an email notification that pre-clearance requests are pending.

The issuer navigates to the Pre-Clearance tool to review and either accept or reject the request:

• Clicking Respond allows the issuer to accept or reject the request:

• If the issuer rejects the pre-clearance request, the seller will again have the ability to request pre-clearance and will not be able to place trades.
• If the issuer approves the pre-clearance request, the seller is able to place trades until the pre-clearance window expires.
• Pre-clearance approval is shown in the Open tab. Issuers are able to close a pre-clearance request early if needed.

Sellers can enter Cashless sale transactions and stock sales until pre-clearance expires.

Timing

The pre-clearance feature is now available to all public companies.

Starting in May 2022, we will require that all Carta accounts have two-factor authentication (2FA), also known as Multi-factor authentication (MFA) enabled. Investor Services customers should confirm all of their team members have personal accounts properly provisioned and secured with MFA/2FA as soon as possible. 

Why MFA/2FA?

MFA is the industry standard for software companies, like Carta, that store sensitive identity and financial information.

What does this mean for me? 

As we make this change, all accounts need to be associated with a single person’s name. 

If there are multiple people at your organization accessing Carta with the same email and password, you need to take action.  

If you’re not sure, click here for instructions on checking or updating the name on your account.

How can I create accounts for other individuals on my team?

You can add people on the people page of each account by following these steps.

If you are unsure about how to set up access for other members of your team, please reach out to our support team at investorservices@carta.com. 

Why can’t we use two-factor authentication with shared login credentials?

We cannot send MFA/2FA codes to multiple people at once. 

Critically: resetting MFA/2FA can only be done for a person’s individual account. If a team member needs to reset MFA/2FA without a backup code, they will need to get in touch with our team and present a photo ID that matches the name on the account. 

How do I get this process started? 

Our Investor Services support team is happy to help you with this process. Reach out to them directly at: investorservices@carta.com. 

Why is this being required?

A password on its own gives you poor protection from hackers. They can steal them from other insecure websites or via malware, and people often reuse the same password for many accounts or choose passwords that hackers can easily guess. Carta is adding this additional security to protect your account from social engineering, phishing, and other related attacks.

Thank you for being a Carta customer, and we look forward to answering any questions you might have about this change. 

We've updated the Total Comp permissions system with two new role types:

• Area lead: Users with this role can edit employees and view bands for their assigned area(s) and level(s)
• Recruiter: Users with this role can view bands for their assigned area(s) and level(s)

To add a teammate as an area lead or recruiter, go to the Settings > Permissions and roles page click on "Add User" and follow the instructions in the modal.

You will be asked to provide the teammate's email address, assign a role, select which areas that you want the teammate to have access to, and then select the highest level within those selected areas that they can view/edit. You can also change the role and permissions for an existing user by clicking on the action button (three dots) in the user table and selecting Edit user.

Soon, companies will have access to the updated Capitalization > By Share Class view. This page comes with improved performance for large Cap Tables, allowing you to view and interact with your Cap Table up to 5x faster.

To access this view, you can navigate to Capitalization > By Share Class.

What’s next?

We will continue to improve the experience, adding a new summary visualization to the top of the page, and improving the navigability between the By Share Class and the By Stakeholder Cap Tables.

Resources

Support Article: Capitalization Table - By Share Class

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

• Support Article: Defining QSBS
• Blog: QSBS & Carta Support for QSBS

What’s new?

Previously, our capital call request tool only allowed General Partners (GPs) to request capital from all investors in the fund regardless of their close date. Starting today, GPs can use the redesigned tool to: 

• Make pro-rata capital calls from their existing investor base
• Call capital from subsequent close investors 

Additionally, GPs will be able to view a list of all their newly closed investors, as well as any investors whose commitments have increased or decreased since the last capital call. The capital call amounts to be called from these investors will be auto-calculated by the tool for the GP to review. 

How it works

1. There are two ways you can request a capital call. You can navigate to the Firm Management Page or through the capital calls tab in the fund page. 

2. Select the type of capital call you would like to request:

   1. Pro Rata capital calls is an improved version of our capital call tool. Input a capital call dollar or percentage amount, followed by call details, and go through the final review step before initiating your capital call.
   2. Subsequent Close capital calls will list out investors who are new and those with changed commitments since the last capital call. You will have an optional text box for additional notes, capital call details, and a final review before initiating your capital call.

Who this affects

This is available for all fund administration customers who are on the Carta General Ledger.

What’s next?

We’ll be expanding the tool’s functionality to handle more complex scenarios, such as calling additional capital from both new and existing investors in the fund. We also plan to embed the PDF notices at the review step to give GPs the option to start the capital call without further approvals.

You can now set the local currency for cash compensation (salary and variable) for your employees' scorecards. This new feature paves the way for better support for international employees. Target compensation for non-USD currencies will be supported in the future.

We've enhanced the leveling framework with new and updated job areas and specializations. This improvement is an important step toward expanding the scope of the Bands feature to include benchmarks for these new job areas and specializations. 

NOTE: These updates do not impact your employee's target salary or equity, as they are simply improvements to the labeling system to more accurately reflect trends in job functions.

The following job areas and specializations have been added and updated. Job areas marked with an asterisk (*) are currently only available for leveling purposes and do not yet support bands. At this time, all specializations still do not differentiate bands/benchmarks from their top-level job area, however, we will soon be launching specialized bands starting with Engineering, IT, Marketing, and HR. You will be notified as soon as bands are available for these new areas and specializations.

Soon, Carta customers will start seeing an expanded set of Roles to help you reflect the different individuals who are handling different aspects of Cap Table management.

For now, users assigned to new roles will serve as point of contact for their areas. Over time, these individuals will see updated experiences and be guided to relevant Carta tools.

To see this experience, Navigate to "Company > Permissions and Roles > Roles"

Corporations  Equity Administrators Improvement 

What’s new?

Previously, Carta's public markets RSU settlement tool grouped all vested tranches for an RSU grant into a single settlement entry. Carta now captures the settlement of each RSU tranche separately, including shares sold or withheld to cover taxes per tranche. 

This enhancement applies to public RSU grants with multiple vested but unsettled tranches.

This change provides the following improvements:

1. Clarity on taxes: If an issuer is releasing multiple tranches at once for a single grant, taxes are now easier to review and reconcile. Each tranche’s taxes are shown distinctly in our reports.
2. Clarity on net shares: Carta’s reporting now breaks down the shares sold or withheld for taxes for each tranche. This provides additional clarity and ease of reconciliation for participants selling net RSU shares through 10b5-1 trading plans.

Changes to reports:

Tax calculations are now captured at the vesting tranche level when setting up an RSU settlement. 

• The vesting date for each tranche now has its own row in our RSU Settlement Batch tax estimates report. Administrators can override taxes for an individual vesting tranche as part of an RSU settlement.

Shares sold or withheld for taxes are now captured at the tranche level in Carta's RSU Settlement Details report. 

• Net RSU shares sold pursuant to 10b5-1 plans in Carta are easier to interpret and reconcile, since we capture gross and net shares per tranche for each RSU settlement.
• Our settlement reports have been updated to show tranche level settlement information.

Timing:

This enhancement will be released to all public Carta companies on February 2, 2022.