Scope of Services: Institutional SPV Formation and Administration

Scope of Services: Institutional SPV Formation and Administration

Per annum pricing includes both formation and administration services by Carta. If you choose to form your own SPV, but utilize Carta’s administrative services, the per annum fee will still apply. Pricing will be determined based on your individual SPV structure, needs, and complexities.

I. SPV Formation 

Client is responsible for remaining in compliance with all applicable laws, rules, and regulations.

SPV Structure 

Carta’s formation document templates will only support the following SPV structures, strategies, and selections:

• Delaware LLC or LP entity - must designate your own manager or general partner entity (as applicable)

• Single asset

• Carry: 0-100% fixed or more complex carry (premium return, preferred return)

• Expense Reserve (on top of commitment): 0-100% of committed capital 

• Management Fees (on top of commitment): Waived OR 0-100% of committed capital

• Unaudited or audited SPVs *

• Portfolio Company Investment or Fund of Funds SPVs *

No other SPV fund structures or selections are supported at this time.

* Subject to additional fees

SPV Formation Services

Included in SPV formation, Carta will work with you and a third party to:

• Obtain your EIN 

• Form your SPV as an LLC or LP in the state of Delaware

• Pay your one-time Delaware LLC or LP formation filing fee 

• Pay your first year Registered Agent fee 

On the Carta platform, Carta will also:

• Create an account for your SPV

• Set up a data room and provide you access 

• Setup subscription documents using Carta’s Closings feature. Please see the "Closings" section following for more details. 

GP entity formation (additional fee). You must have a GP entity (for an LP SPV) or a Manager entity (for an LLC SPV) domiciled in the US to function as the Manager or GP of your SPV. If you do not have one, Carta will engage a third party service provider on your behalf to create an LLC for an additional one-time fee of $2,000, using a Carta document template Operating Agreement. The SPV entity will be formed in the state of Delaware. Except as stated in this scope of services, all expenses after initial formation are your responsibility. Responsible party must be a US-based natural person with a US taxpayer ID.

Template SPV Formation Documents

Carta will provide the following SPV formation templates:

• Certificate of Formation (filed with Delaware)

• LLC Operating Agreement or Limited Partnership Agreement

• Subscription Agreement

• Investor Questionnaire 

USE OF CARTA’S DRAFT SPV FORMATION DOCUMENT TEMPLATES IS ENTIRELY AT YOUR OWN RISK AND SUBJECT TO CARTA’S LEGAL DOCUMENTS TERMS OF USE AND DISCLAIMER LOCATED AT https://carta.com/privacy/document-generation-terms-and-conditions/. CARTA ASSUMES NO LIABILITY FOR THE USE OF OR RELIANCE ON THESE DRAFT DOCUMENTS.  Carta does not guarantee such draft documents’ applicability or accuracy in regard to your particular circumstances. These documents are provided “as is” without warranty of any kind, either express, implied, or statutory, including without limitation, warranties of merchantability, fitness for a particular purpose, satisfactory purpose, title or noninfringement. Some jurisdictions do not allow the exclusion of implied warranties, so these exclusions may not apply to you.

Talk to your Carta representative to receive samples of the SPV formation templates. To qualify for Carta SPV formation services you must use the templates provided. If these templates do not conform with your desired SPV structure, then your SPV will not be eligible for Carta formation services. However, your SPV may be eligible for Carta administration services.

For any SPV documents outside of the formation templates, please talk to your Carta representative for legal partner referrals.

Closings

Closings must be executed on the Carta Closings feature using our subscription documents and Investor Questionnaire. Carta Closings allows you to invite investors to create a Carta account to complete closing steps. You are responsible for tracking investors as they execute subscription agreements and monitoring their responses to the Investor Questionnaire.

Other Filings

Included in SPV formation, Carta will:

• Prepare and file your Form D filing and blue sky securities filings within 15 days of the first close of investors into your SPV

Carta will prepare the forms for your approval before filing, and you remain solely responsible for the accuracy and completeness of such filings. Carta may assist with related amendments or renewals as needed.

You will(1):

• Promptly notify Carta of your first SPV closing and each additional closing

• Provide Carta with state residency information for all of your investors

Your SPV formation does not include the preparation or filing costs associated with:

• Any GP entity or Manager entity formation filings, fees, or expenses, unless GP entity formation add-on is selected

• State qualifications to do business 

• Form ADV or state investment adviser filings*

• Dissolution

• Other state or municipality specific fees or filings not listed as specifically included.**

*Carta can provide introductions to a third party service provider who will assist you with preparation and filing of your Form ADV or equivalent.

** Depending on the state(s) in which you operate, different fees, expenses, or filings may apply. All state specific fees and filings, unless specifically noted above, are not covered under your annual SPV fee. 

For options with managing the above, which are outside the Carta base SPV Scope of Service, reach out to your Carta representative for a referral to one of our preferred partners.

Investor KYC Due Diligence

Included in your SPV formation fee, Carta will provide “know your customer” (KYC) and “anti-money laundering” (AML) services for up to 60 investors. Additional investors can be serviced for an additional fee. Learn more here. 
 

Annual Filings 

So long as you are continuing with Carta for SPV administration, Carta will:

• Prepare and file your annual Delaware annual report

• Pay your SPV’s annual Delaware franchise taxes

• Pay your SPV’s annual Registered Agent fee

You will(1):

• Provide any change of information required for the Delaware annual report

II. SPV Administration 

Accounting services are supported for USD-denominated entities only.

US GAAP Reporting

The following statements will be produced via the Carta platform:

• Balance Sheet

• Statement of Operations

• Schedule of Investments (SOI) 

• Statement of Changes

• Partners’ Capital Account Statements (PCAPs)
   

The following performance metrics will be available on the Carta platform: Net IRR, Gross Deal Level IRR, RVPI, TVPI, DPI and MOIC.

You can view a sample of the Carta system-generated external financial reporting package here.

Books and Records 

Carta will update and maintain the accounting books and records for the SPV. You will have easy, read-only access to review the books and records.

For the SPV, Carta will: 

• Maintain and update the Schedule of Investments (SOI) on the Carta platform 

• Maintain total capital called and distributions received for indirect investments

• Update valuations at quarter-end or at a material financing

Necessary documents or information you will provide Carta(1):

• Required documents and information from the Implementation Checklist

• Fully executed closing set for portfolio company investments (e.g., countersigned purchase agreement, articles of incorporation (AOI) / certificate of formation)

• Fully executed subscription packets for Fund of Fund investments

• Submit price per share and/or ending fair market value of SPV-specific holdings at least 15 business days prior to reporting deadline in accordance with the SPV’s valuation policy (requires finalized supporting documentation consistent with industry standards). 

• PCAPs for underlying Fund of Fund investments - Client is responsible for retrieving any fund investment related documents from external sources/third parties, including but not limited to investors’ capital account statements, capital call notices, distribution notices, and financial statements.

• Complete dissolution of the business at end of life of the applicable entities, after final distribution

Banking and Payments

Carta will:

• Provide annual cash reconciliation

• Set up electronic payments for all cash activity as requested

• Confirm all fund expenses (including management fee calculations) are done in accordance with the operating agreement(s)

• Manage Form 1099 process electronically at year-end as approved, including filing with IRS on client’s behalf

You will provide Carta(1):

• Access to the SPV's bank account as required, with the ability to set up payments (bank must have two step-authorization capability and account must be in the SPV's name)

• Vendor W-9s and email contact prior to initial payment

• Wire or other payment instructions, invoices for expenses, and executed purchase documents for investments

You are responsible for:

• Setting up bank accounts, one for each Carta administered entity, with your chosen banking partner as approved by Carta*

• Final review and releasing of payments after you receive confirmation from Carta

• Performing any call backs to your vendor

• Ensuring accurate user profile setup within the Carta platform

• Establishing authorized access to your bank account

• Resolving any failed, rejected, returned, or on hold payments due to additional information or documentation needed by your banking partner

* Change in banking partner may result in a fee adjustment.

These services are subject to the Venture Capital Payment Terms and Conditions located at https://carta.com/legal/agreements/venture-capital-payment-terms-conditions/.

Carta offers the opportunity to establish a bank account with our banking partner, subject to the bank's client criteria. You are not required to use our banking partner and may use any bank of your choice, however please note that this may result in a fee adjustment. 

Year-End Filings

You will:

• Complete any municipal, state, foreign, or federal reporting or regulatory filings. Such filings or reporting will not be completed by Carta

Carta will not be responsible for any SSBCI-related activities, including but not limited to any SSBCI-specific reporting requirement, custom chart of accounts or custom reporting. Client will handle all SSBCI-specific reporting requirements and filings with the applicable states.

 

Tax Support 

Carta will:

• Provide books, records, and supporting documentation to your tax preparer

• Distribute K-1s generated your tax provider through the Carta platform

You will:

• Coordinate execution of the tax engagement letter (by September 30 of each year) and tax returns, with executed copies to Carta as applicable

• Manage relationship with tax preparer, including answering ongoing questions and requests from your tax preparer 

To further streamline your SPV administration, Carta offers SPV tax preparation services for an additional price. Learn more here.

 

Audit Support 

Audit support is subject to an additional charge.

If you choose to have an audited SPV, Carta will:

• Provide books, records, and supporting documentation to your auditor

• Complete template for audit confirms; auditor to send and collect from various parties (portfolio companies, banks, legal counsel, etc.)

• Complete audit notes and financial statements in the Carta platform. You can view a sample of the audited financial reporting package here.

• Distribute audit report generated by your auditor through the Carta platform

You will(1):

• Coordinate execution of the audit engagement letter (by September 30 of each year), audit representation letter, audit confirms, etc. with executed copies to Carta as applicable 

• Manage relationship with auditor, including completion of audit notes and ongoing questions and requests from the audit team   

• Complete and deliver audit reports in a timely manner

• Collect AOIs, financials, and other valuation support for portfolio companies

• Provide industry and geography details as well as updated contact info for all portfolio holdings

• Provide SPV’s valuation policy and valuation support to substantiate any discretionary valuation adjustments or approaches consistent with industry standards

• Collect capitalization tables and annual financial statements for portfolio companies*

* With Carta’s Portfolio Insights, you get a comprehensive and shareable view of your portfolio companies' performance, including the collection of capitalization tables and annual financial statements. Please reach out to your Carta representative for information on this service.

Capital Calls 

Carta will:

• Add new investors to the Carta platform and issue the initial capital call notice upon your execution of the subscription agreement *

• Execute on your post initial capital call requests the same business day if received prior to 3pm EST4 

* Initial capital call notices will automatically be generated only if you use Carta’s Closings feature, included in your SPV administration fee. If you do not use the Closings feature, you must submit a capital call request to Carta before Carta can issue the capital call notice. This may take up to 48 hours.

The following are available via the Carta platform:

• Per-investor calculations, preparation, and distributions of capital notice to investors 

• Tracking receipts of capital contribution payments

• Follow-ups to investors (at your discretion) 24 hours after the capital call due date

You will(1):

• Submit and approve capital call requests through the Carta platform  

• Provide potential investments and realizations for cash projections

• Provide the percentage or dollar amount to be called and any other required information

• Notify Carta of commitment or carry percentage changes by member 

Cash Distributions

Carta will:

• Perform waterfall calculations in accord with the operating agreement(s)

• Send notifications to investors to update their wire instructions on the Carta platform

• Complete and coordinate potential tax distributions  

• Draft and publish distribution notices on the Carta platform

• Set up distribution wires in your bank account as approved

You will(1): 

• Provide amounts to be distributed and final sign-off on calculations*

• Follow-up with investors to confirm wire instructions beyond two failed attempts

* 5 business days(2) notice required for distribution requests

Stock Distributions 

Carta will:

• Perform waterfall calculations in accord with the operating agreement(s)

• Draft and publish distribution notices on the Carta platform 

• Provide allocation of shares to Client’s third-party brokerages to facilitate distributions

You will(1):

• Provide number of shares to be distributed and final sign-off on calculations*

• Collect DTC instructions from investors and coordinate with your selected third-party brokerage firm

* 5 business days(2) notice required for distribution requests