In February 2022, the SEC proposed new rules requiring greater disclosures and reporting requirements for registered investment advisers.

Carta sought to expand the comment period beyond the original 30 days and recommended SEC consider the rules’ adverse impact on emerging funds.

Outcome: The SEC extended the comment period and moderated its final rules to address industry concerns. Although the SEC’s rules are now being disputed in federal court, the Carta Policy & Product teams are developing tools to help fund managers comply with the new reporting requirements.

Carta and others in the innovation community signed a letter to legislators urging them to adopt the R&D expense provision included in the proposed tax package passed by the House; the provision has remained bipartisan even as other aspects of the deal became divisive.

Our fund administration customers told us it would be helpful to have a full readout on the state of the venture capital regulatory landscape—a VC policy handbook that they could consult as needed. So we created one.

In April 2023, Carta CEO Henry Ward testified before the House Financial Services Committee on the importance of the private markets to the innovation economy—and the critical role that venture-backed companies play in maintaining America’s technological edge.

The qualified small business stock (QSBS) exclusion limits capital gains taxes for the founders, employees, and investors of small businesses. Carta sought to prevent curtailment of the QSBS exclusion, which provides vital support to startups. The policy team:

• Built a coalition of advocacy leaders across the innovation economy
• Organized multiple coalition letters to Congress
• Engaged 40+ meetings with policymakers

Outcome: The measure to curtail QSBS curtailment was removed from Inflation Reduction Act.

An 83(b) election lets taxpayers accelerate a portion of their tax liability on equity ownership to the date of acquiring the shares—it can result in significant tax savings. Carta sought a streamlined 83(b) election process that would allow employees to sign and file electronically.

The policy team organized 40+ organizations to petition the IRS for electronic signature relief.

Outcome: IRS has provided temporary relief that enables electronic signature for 83(b) elections through October 2023. Bipartisan legislators have introduced a bill to make the change permanent.