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Phantom Share Agreement

Phantom Share Agreement Template for United Arab Emirates

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Key Requirements PROMPT example:

Phantom Share Agreement

"I need a Phantom Share Agreement under UAE law for our Dubai-based technology startup, covering 50 phantom shares to be granted to our new CTO with a three-year vesting period starting March 2025, including specific provisions for an anticipated IPO within the next five years."

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Document background
The Phantom Share Agreement is utilized in the UAE business environment where companies seek to provide employees with equity-like incentives while maintaining existing ownership structures. This is particularly relevant given UAE's foreign ownership restrictions and specific regulatory requirements. The document typically outlines the grant of phantom shares, which provide recipients with contractual rights to receive cash payments based on the company's value appreciation, similar to actual shareholders. The agreement includes crucial details about vesting conditions, valuation methodologies, payment terms, and termination provisions, all structured to comply with UAE laws and regulations. This type of agreement is especially valuable for companies operating in the UAE that want to attract and retain key talent while maintaining compliance with local ownership requirements and corporate governance structures.
Suggested Sections

1. Parties: Identification of the company and the phantom share recipient

2. Background: Context of the agreement and purpose of the phantom share grant

3. Definitions: Key terms including Phantom Shares, Fair Market Value, Vesting Date, etc.

4. Grant of Phantom Shares: Details of the phantom shares being granted, including number and grant date

5. Vesting Provisions: Vesting schedule and conditions for the phantom shares

6. Valuation Mechanism: Method for determining the value of phantom shares

7. Payment Terms: Timing and method of payments for vested phantom shares

8. Termination Provisions: Treatment of phantom shares upon various types of employment termination

9. Confidentiality: Obligations regarding confidential information

10. Tax Implications: Tax treatment and responsibilities

11. Governing Law and Jurisdiction: Specification of UAE law and relevant courts

12. Amendment and Termination: Procedures for modifying or terminating the agreement

Optional Sections

1. Change of Control Provisions: Include when company anticipates potential merger, acquisition, or restructuring

2. IPO Provisions: Include when company contemplates future public offering

3. Non-Competition and Non-Solicitation: Include for senior employees or when protecting business interests

4. Clawback Provisions: Include for senior executives or when required by company policy

5. Dispute Resolution: Include when parties prefer alternative dispute resolution methods

6. Currency Conversion: Include when payments might be made in currency other than AED

7. Assignment Rights: Include when transfer rights need to be specifically addressed

Suggested Schedules

1. Schedule 1 - Vesting Schedule: Detailed timeline and conditions for vesting of phantom shares

2. Schedule 2 - Valuation Formula: Specific calculation method for determining phantom share value

3. Schedule 3 - Notice Requirements: Forms and procedures for various notices under the agreement

4. Schedule 4 - Payment Procedures: Detailed process for executing payments

5. Appendix A - Definitions: Extended definitions and interpretations

6. Appendix B - Tax Treatment: Detailed explanation of tax implications and calculations

7. Appendix C - Corporate Structure: Current corporate structure relevant to valuation

Authors

Alex Denne

Head of Growth (Open Source Law) @ ¶¶Òõ¶ÌÊÓƵ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

alex.den.21@genieai.co
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Human Resources

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Executive Leadership

Board of Directors

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Relevant Roles

Chief Executive Officer

Chief Financial Officer

Chief Operating Officer

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Technical Director

Regional Manager

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