spv formation and administration

Scope of Services: 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

SPV Structure

Carta will only support the following SPV structures, strategies, and selections:

Delaware LLC or LP entity - must designate a managing entity
Single asset
Carry: 0-100% fixed or more complex carry
Expense Reserve (on top of commitment): 0-100% of committed capital
Management Fees (on top of commitment): Waived OR 0-100% of committed capital
Audited SPVs
Fund of funds

No other 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.

You must have a GP entity or a manager entity domiciled in the US to function as the Manager of your SPV LLC. If you do not have one, Carta will engage a third party service provider on your behalf to create one for an additional one-time fee of $2,000. 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 tax ID (SSN).

Template SPV Formation Documents

Carta will provide the following SPV formation templates:

LLC Operating Agreement or Limited Partnership Agreement
Subscription Agreement
Investor Questionnaire

USE OF DRAFT SPV FORMATION DOCUMENTS 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 non-infringement. 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.

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 D or blue sky filings*
Form ADV or state investment adviser filings*
Investor AML/KYC due diligence (can be provided for an additional fee)
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 D, blue sky filings, and 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.

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 will¹:

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 Carta¹:

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 Carta¹:

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 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 will¹:

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 relationships 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 EST²

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 distribution of capital call notices to investors
Tracking receipts of capital contribution payments
Follow-ups to investors (at your discretion) 24 hours after the capital call due date

You will¹:

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 will¹:

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 days² 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 will¹:

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 day notice² required for distribution requests

Investor Information

Investors will be responsible for updating their information, including maintaining investor contact preferences, wire instructions, W-9s/W-8BENs, and other requested information on the Carta platform. Contact your Carta representative to engage separate AML/KYC services for an additional fee.

All communications will be on the Carta platform, which will serve as the communication repository for communications like capital calls, distributions, quarterly and annual reports, investor update letters, tax documents, etc.

Carta will assist with providing you answers to investor questions related to SPV information on the Carta platform. Carta will not communicate with investors directly.

You will provide¹:

Fully executed Operating Agreements with list of commitments and carry percentage by member
Fully executed subscription packets*
Fully executed side letters (if applicable)
Investor W-8s, W-9s, and up to date contact information*
Information about disregarded entities

*With Carta’s Closings feature, you can manage, close, and share subscription packets with your investors.

To discuss any services that are outside of the scope addressed above, please talk to your Carta representative.

For GP entity administration, please see the scope of services here.

Dissolutions

You are responsible for dissolution of the SPV at the end of its life.

To discuss any services that are outside of the scope addressed above, please talk to your Carta representative.

¹Additional documentation or information may be required as circumstances warrant

²Excluding federal holidays and office closures. Carta’s general hours of operations can be found at https://support.carta.com/guide/en/guEh25yH5d. All notices received after the listed closing time shall be deemed received on the next business day.

DISCLOSURE: This communication is on behalf of eShares, Inc. dba Carta, Inc. and its affiliates ("Carta"). This communication is for informational purposes only, and contains general information only. Carta is not, by means of this communication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services nor should it be used as a basis for any decision or action that may affect your business or interests. Before making any decision or taking any action that may affect your business or interests, you should consult a qualified professional advisor. This communication is not intended as a recommendation, offer, or solicitation for the purchase or sale of any security. Carta does not assume any liability for reliance on the information provided herein.