Document background
The Phantom Stock Agreement is utilized when companies want to provide employees with the economic benefits of stock ownership without diluting actual equity or dealing with the complexities of share transfers. This document type is particularly relevant in the Indian context where companies must navigate specific regulatory requirements under the Companies Act, 2013, SEBI regulations, and tax laws. The agreement typically details the number of phantom units granted, vesting schedule, valuation methodology, and payment triggers, while ensuring compliance with Indian corporate and tax regulations. It's commonly used by both private and public companies in India as part of their employee retention and incentivization strategies, especially when actual equity distribution is not feasible or desired. The Phantom Stock Agreement must be carefully structured to address Indian regulatory requirements while providing clear terms for both the company and participants.
