Document background
The Phantom Unit Agreement serves as a critical instrument for companies operating in India who wish to provide long-term incentives to key employees without diluting actual equity. This document type is particularly valuable for private companies, subsidiaries of multinational corporations, and organizations that cannot or prefer not to issue real equity. The agreement typically outlines the grant of phantom units, vesting schedules, valuation methodologies, and settlement procedures, all while ensuring compliance with Indian regulatory requirements including securities laws, tax regulations, and employment legislation. The document becomes especially relevant during talent retention initiatives, succession planning, or when creating long-term incentive programs.
