Bringing your international (Non-US) company onto Carta: FAQ
What will Carta do for my company?
- Companies: Manage your company’s cap table, keep track of documents in one place, save time on vesting calculations, and facilitate option document signatures.¹
- Investors: Allow investors to view their holdings electronically, and choose how to share your cap table with them.
- Legal: Streamline how you work with your legal team to track your company’s equity, and share a source of truth that is updated in real-time.
- Employees: Provide employees with a place to track their stock option vesting and view their option documents.
¹ Many countries have modernized or are in the process of modernizing their laws to accept the use of electronic certificates, documents, and signatures. If you are unsure whether these are accepted in your jurisdiction, please consult your local legal advisor.
Can I issue out securities and options through the Carta platform?
- Securities: Carta is not a registered transfer agent outside of the US. This means that while we can track your equity, a local ink-and-paper copy certificate needs to be retained.
- Option grants: Many countries allow for electronic signature of option grants. If you are unsure whether the Carta electronic signature is acceptable for option grants in your country, please consult your legal advisor.
Always check with your legal counsel if you have any questions about how the Carta processes will apply in your country.
What documents will I need?
- A transactional/historical ledger for all securities, based in Excel. We will use this to build out historical data.
- A current cap table, if not incorporated into the above.
- Formation documents. These differ by country of formation, but all countries have some version (usually called “Articles” or “Certificate” or “Agreement”.) We will want originals and all amendments.
- Equity master plan documents (if applicable.) This will be used to understand your equity plan and make sure it is represented correctly in Carta.
- Form-Of (templated) option grant documents. These include the Form-Of grant and Form-Of Exercise/settlement documents.²
- Original signed warrants OR Form-Of (templated) warrant documents.³
- Original signed convertible debt OR Form-Of (templated) convertible debt documents.³
² Note that you can use originals, as well. If you will be issuing electronic options through the platform, you will want the Form-Of (templated) option documents for these future issuances. When in doubt, always check with your own legal counsel.
³ It is encouraged to use the scanned copies of these documents. During the later stages of onboarding, you and/or your legal will be tasked with attaching the signed versions. If you do not want to do this, the templated versions can be attached.
What will my stakeholders receive?
The initial email (sample company is Meetly):
When setting up your company, you will have the option to list your securities as being “Issued in paper: Yes” or “Issued in paper: No.” This will impact the language that stakeholders see when accepting their holdings. If you intend to issue electronic certificates, make sure to request that your Implementations Manager set all holdings to “Issued in paper: Yes.” If you intend to retain local copies of the securities as the legally binding document, make sure to request that all holdings be set to “Issued in paper: No.” Always consult with your legal team to make sure local jurisdiction allows for electronic signatures. The language is laid out below (stakeholder is Tagg, company is Meetly):
Issued as paper: Yes
- Certificates: The undersigned hereby accepts and acknowledges the receipt of the following electronic certificate OS-13 to Tagg Palmer for 630,000 shares of Ordinary Stock (the “Shares”) and further agrees to accept this and all other electronic certificates issued by Meetly (the “Company”) in lieu of or in replacement of any existing paper stock certificate or previously issued electronic certificate in the undersigned's name and representing the Shares (the "Prior Certificate").
In the event the Company has previously issued a paper stock certificate or electronic certificate as a representation of the share ownership reflected in the electronic certificate OS-13, to induce the Company to acknowledge the loss, destruction or return of a previously issued stock certificate, to refuse to recognize any person or entity other than the undersigned as the owner of the Shares, and to reissue to the undersigned a replacement electronic stock certificate representing the shares of the Company’s capital stock, the undersigned hereby declares that the undersigned:
(a) is the owner of the Prior Certificate;
(b) has either (i) made a thorough search and is unable to find the Prior Certificate and believes it to be lost, (ii) destroyed the Prior Certificate, or (iii) returned, or will immediately hereafter return, the Prior Certificate to the Company or to the legal counsel of the Company; and
(c) has not (i) pledged or sold the Shares or any part thereof represented by the Prior Certificate, (ii) assigned, endorsed, deposited, hypothecated, or disposed or made any other transfer thereof or of the rights or interests therein, or (iii) signed any power of attorney, stock power or other assignment or authorization respecting the Prior Certificate or any right or interest therein, which is now outstanding or in force.
The undersigned hereby requests the Company’s acknowledgement of the loss, destruction or return of the Prior Certificate in the records of the Company and the replacement of the Prior Certificate with a new electronic certificate.
In the event the undersigned has not received the Prior Certificate or the Company or the Company’s legal counsel is in possession of the Prior Certificate, the undersigned hereby acknowledges and agrees to the destruction of any such Prior Certificate by the Company or the Company’s legal counsel and the replacement of the Prior Certificate with the new electronic certificate.
In consideration of the Company issuing the new certificate, the undersigned agrees, for itself and on behalf of its affiliates, successors and assignees, to defend and indemnify the Company and hold it and its affiliates and successors, and their respective directors, officers, employees or agents harmless from any claim, expense, damage, loss or liability caused by, or in any way relating to, the loss, destruction or return of the Prior Certificate, or the issuance of the new electronic certificate. In the event that the Prior Certificate should be discovered or come into the possession of the undersigned or any of its successors or assignees, the undersigned agrees to either (A) return it, marked canceled, to the Company promptly, or (B) destroy it.
Executed October 3rd, 2018
By: Tagg Palmer
- Option grants: This Option Grant ES-13 (the "Equity Award") is subject to all of the terms and conditions set forth in this electronic issuance and all of the documents attached hereto (the "Documents"), all of which are incorporated herein in their entirety.
By entering your full name below, you acknowledge that this Equity Award was previously issued to you by the Company. You further acknowledge that as of the date of this award, this electronic issuance and the Documents set forth the entire understanding between you and the Company regarding the Equity Award and supersede all prior agreements, promises and/or representations on that subject. If there is any conflict between the provisions of this electronic issuance and those of the Documents, the provisions of the Documents will control.
Issued as paper: No
- Certificates: I hereby acknowledge the receipt of the following electronic certificate:
OS-14 to Tagg Palmer for 45,000 shares of Ordinary Stock
Executed October 3rd, 2018
By: Tagg Palmer
- Option grants: This Option Grant (the "Equity Award") is subject to all of the terms and conditions set forth in the applicable documents available for download in connection with this Equity Award (the "Documents"), all of which are incorporated herein in their entirety.
By entering your full name below, your signature will be applied to the Documents, as applicable, and you acknowledge receipt of, and understand and agree to the details of this Equity Award and the Documents. You further acknowledge that as of the date of this award, the details of this Equity Award and the Documents set forth the entire understanding between you and the Company regarding this Equity Award and supersede all prior agreements, promises and/or representations on that subject. If there is any conflict between the provisions of the details of this Equity Award and those of the Documents, the provisions of the Documents will control.
How long will onboarding take?
Whether your cap table has only two founders certificates or over 1,000 securities, we have a defined, streamlined process that will get you up and running on Carta as soon as possible. Most companies are able to import their cap tables in under 30 days; some companies with small cap tables can complete the process in a matter of hours. Ultimately it depends on how quickly you and your legal team can work together to import your cap table data and documents to Carta. Other factors include the complexity of your cap table history, the number of issuances and transactions that have been made, and the completeness of your records.
We strive to complete the onboarding in no more than 90 days, so we encourage you to start the process when you have enough time and resources to dedicate to the project. In general, if your onboarding takes longer than 90 days your account will be moved into “Icebox Mode.” This means your access to using Carta services will be frozen until the onboarding is completed.
Why do we need to import historical data?
For Carta to be able to provide you accurate data while closing a round of financing, conducting an audit, expensing stock compensation, or performing a 409A valuation (for US based ISO issuances), a complete account of your cap table history is required. We also offer the ability to generate historical cap table reports.
Why do I need to send electronic certificates to existing shareholders?
Adopting Carta for your company’s equity management requires logging all your existing issuances in our electronic format (although there are some exceptions for certain legal conditions). We have a duty to make sure all of your stakeholders have an opportunity to view their equity through our platform and will follow-up until all holdings are accepted. In addition, full leverage of the platform means importing all equity so that real-time changes can be reflected directly on your cap table.
What is a stakeholder?
A stakeholder is a founder, investor, employee, or other person or entity who holds an equity interest in your company. For example, a company with one founder, four investors and ten option holders would have fifteen stakeholders. We count only unique stakeholders -- so if a single person or entity holds several issuances (even different types of securities), we still count that as one stakeholder.
What does each shareholder and option holder see?
By default, each shareholder and option holder will be able to view only their own holdings, and will not be able to see your company’s cap table, their fully diluted ownership, or the holdings of other stakeholders. You can manage how much information certain stakeholders get to see through account settings and permission settings.
How do you handle stock splits?
Stock splits pose different issues for every cap table management platform. Carta has developed an approach to ensure accuracy for implementing both historical and future stock splits in your Carta account.
Onboarding historical stock splits -- through our experience with thousands of onboardings, we’ve learned that it’s most efficient to implement all post-split cap table values during onboarding. We then reverse-engineer the company’s pre-split cap table after activating the account. That is a more precise method of reflecting stock splits than manually trying to untangle data sets that include both pre- and post-split cap table figures during onboarding. This is not an attempt to cut corners - it is designed to maximize efficiency, minimize onboarding duration, and prioritize urgently needed post-split data over pre-split data generally needed only for recordkeeping. Based on this approach, stock-split clients receive more accurate, high-priority data and reporting sooner, and can focus on lower-priority data later.
When onboarding the post-split data is complete, the client can immediately generate reports and use our compliance services for data going back to the most recent split date. Our engineers then calculate the historical cap table data going “backwards” based on the inverse of the of split ratio the company used. The pre-split data and the post-split data are then merged to provide a historical account of the company’s cap table. Nothing changes on the current cap table, and stakeholders won’t need to re-accept anything because the terms they accepted when the account is activated will reflect the current state of their equity interest.
Implementing future stock splits in Carta --when you request a stock split on your active account in Carta, we conduct a review with you to make sure your account is fully up-to-date, and that all transactions that have been reflected in your account. We then generate three pro-forma models of the proposed split for approval from your legal team and internal decision-makers. Once approved, our engineers run the split on your account, and you will then see the post-split values and quantities reflected in the account, along with a notation on each issuance explaining the effect of the stock split.
How do you handle stock option re-pricings?
A stock option repricing is essentially an amendment of an existing option. Carta treats this as a cancellation of the original option and subsequent issuance of a new option at a new price. The old option is cancelled as of the repricing date, and the new option with the new price is granted as of the same date.
Onboarding historical option repricings -- on the onboarding spreadsheet, you and/or your legal team lists all of the original options using the original strike price, and enters the repricing date as the cancellation date for each. Any repriced options are listed again as new options with the new strike price, and repricing date is used as the grant date. The new options are linked to the old options by entering the old option ID number in the “Amended from” column for the new option.
Why is there an implementation fee?
The implementation fee reflects the value that our team brings to cleaning up your cap table throughout the onboarding process. Our onboarding managers are trained professionals who have backgrounds in law, equity management, finance, and accounting. On nearly all the cap tables we have onboarded to Carta, our team has spotted errors, inconsistencies, and compliance issues. As part of the onboarding process, we try to identify these errors and help you correct them. Sometimes our engineers and product designers will get involved in special onboardings to meet your company’s needs.
Should I use personal or business email addresses for investors?
Use the business email address if the security is issued to the firm. If it’s issued to the person (shareholder name is a person’s name) then you should use the personal email address. For investment firms, Carta picks up on the @ domain of the security holder email address. This will funnel all securities to one account. For example, all securities issued to @krakatoaventures.com will flow to Krakatoa Venture to accept in one account.
Should I use personal or business email addresses for employees?
We recommend that you use your employees’ personal email addresses. However, it’s OK to use any email address they can access to receive an email invitation from Carta to view and sign for their equity -- including a work email address. They can change it later, if needed.
Does Carta generate option documents?
Carta does not generate legal documents, including option documents. Your legal team remains responsible for creating legal documents, which can then be uploaded to the appropriate place in your Carta account.
Why can't you do the data transfer onto your spreadsheet for me?
We rely on you to work with your legal team to complete the import spreadsheet and other onboarding tasks in order to reduce the risk of mistakes. You and your legal team are more knowledgeable about your company’s cap table history, the terms of your documents, and other nuances about your company’s equity. Keep in mind also that your legal team will be responsible for helping you maintain your account over time, and ultimately they must sign off on the accuracy of the data in Carta. In our experience with thousands of onboardings, we have learned that getting your legal team involved earlier reduces the introduction of incorrect data and reduces your legal costs in the long run.
I don't want to bug my investors. Why do I have to send them anything?
When you adopt the Carta electronic format, you are giving a gift to your investors and saving yourself time. While each prior certificate does still exist outside of Carta, our ability to manage your cap table depends on allowing stakeholders to confirm their holdings. We must make sure that your shareholders have accurate information about their equity interests in your company.
How do I contact my onboarding manager?
You can contact your onboarding manager by email or by setting up a call through your Setup Guide. Before you do that, we recommend searching our Online Resource Center (support.carta.com) for answers to your questions. This is usually faster than waiting for an available call time.
Who is responsible for managing my account after go live?
Carta is a tool for you to streamline the workflow between you and your legal team. Carta is not a replacement for your legal team or a way to be exempt from legal compliance requirements. We therefore rely on you to work with your legal team to manage your Carta account and update your company’s cap table on an ongoing basis. If you have any questions, make sure to direct your post-onboarding support issues to email@example.com.
Do we need to upload all signed agreements?
It’s not required, but in certain cases it may be recommended or best practice.
Securities issued in Carta are not intended to supersede all previously signed documents, and we work with you to make sure that the terms reflected in Carta match the existing terms exactly. Some companies choose to have all holders sign the same standard forms through Carta. Other companies choose to attach the signed agreements to the corresponding options or warrants in Carta to reduce confusion.
Certificates in Carta only represent ownership of shares of the company’s stock, and do not supersede the terms of any stock purchase agreements or other documents that created the ownership. You can attach those documents to a certificate in Carta for record-keeping purposes, if you wish.
Convertible notes and SAFEs in Carta are generally informational and do not replace existing agreements. We recommend attaching the signed documents to your records in Carta.
Can I still onboard if my company is in the middle of a financing?
If you are in the middle of a round, make sure to let your Onboarding Manager know. Best practices are to expedite the onboarding and close the round after activating on Carta. You can then send out records of holding to your new investors.