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.