Drafting securities: Glossary of supported fields

Profits interest

Share class*

Specify the share class from which the certificate is being issued, whether common, preferred, or any other class. Be sure that any new preferred share class has been created by a company admin and made available before making this selection, which dictates the rights and privileges associated with the shares.

Certificate #

Optionally, enter a unique identifier for the security. If left blank, the system will automatically increment from the last issued security of that type.

Transaction value

Number of shares*

Enter the number of shares attached to the security.

Currency*

Select the currency for the security price.

Base value

The starting point for calculating the value of the PIUs, determined by the company.

Value of IP transferred

The assessed worth of intellectual property exchanged for the shares.

Other consideration

For share issuances involving considerations other than cash or IP, this field allows you to provide additional details.

Individual share price

The value assigned to each PIU share at the time of grant, used for administrative and financial purposes to calculate the overall value of the PIUs.

Shareholder

Name*

Enter or select the full name of the stakeholder (person or entity) receiving this security.

Email*

Include the stakeholder's email address, (preferably their personal email) or the email of their appointed individual with power of attorney. For minor stakeholders (under 18), enter the email of their legal guardian. 

Threshold Equity Value*

The predefined value or performance milestone that must be attained before participants can benefit from their PIUs, encouraging and rewarding them when they contribute to the company's growth and success.

Per unit threshold value

Allows the LLC agreement to track the threshold at the unit level.

Example: If the company is worth $10 million and there are 10 million units, the Per Unit Threshold is $1.00. The PIU holder effectively only participates in distributions that exceed $1.00 per unit.

Overall threshold value

Represents the total equity value of the company that must be distributed to existing members (capital interest holders) before the PIU holder receives any payout.

Example: If the Overall Threshold is set at $10 million, the company must be sold for more than $10 million for the PIU holder to make a profit

Stakeholder relationship*

Select the stakeholder's relationship to your organization. This choice is essential for stock compensation expense accounting, helping to determine whether the award expense falls under ASC-718 or 505-50.

Employee ID

This field helps maintain synchronization and accurate record-keeping between Carta and your HRIS.

Board consent

Board approval date*

Enter the date your board officially signed a consent approving the issuance. In most cases, this date should precede or coincide with the issue date and follow the vesting start date (if there is one)

Issue date*

Enter the date when the stakeholder officially received the security from your company, which must be today or a date before today. Typically, the issue date coincides with or follows the board approval date and comes after a vesting start date.

Personnel details

Job title

If applicable, the job title of the stakeholder who is receiving the equity.

Annual salary

If applicable, the annual salary of the stakeholder who is receiving the equity.

Compliance

Federal exemption*

Choose the appropriate exemption to ensure regulatory compliance, based on the type of security, investor qualifications, disclosure requirements, etc. For additional guidance, consult your legal team.

State exemption

Refer to your counsel for guidance on state exemption.

State of residency

The state where the stakeholder receiving the equity resides.

Rule 144 date*

The date when Rule 144, a regulation governing the public resale of securities, applies to the shares. Typically, it's the same as the share issuance date in order to maintain compliance with legal and regulatory requirements.

Why is the Rule 144 date different from the issue date?*

*Mandatory when applicable

If the Rule 144 date differs from the security's Issue date, you'll be asked to provide a reason to ensure compliance with legal and regulatory standards.

Vesting

Vesting schedule*

Select one of your vesting schedule templates from the dropdown, which determines when and how the security becomes available to the stakeholder. To add a custom schedule to a security, select + New vesting schedule and follow these instructions.

Vesting start date*

*Mandatory for securities with a vesting schedule attached

The date when the security begins vesting. This is typically the same as the employment start date for new hires, and should be on or before the board approval date.

Acceleration terms

Enter terms describing when conditions when vesting can be accelerated.

Documents and notes

Documents*

Choose one or your predefined document sets from the Templates page or select + New documents to attach relevant paperwork to the security.

Notes

Use this field to include any additional remarks or notes related to the security.