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Phantom Stock Agreement

Phantom Stock Agreement Template for Pakistan

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Key Requirements PROMPT example:

Phantom Stock Agreement

"I need a Phantom Stock Agreement under Pakistani law for our tech startup's senior software engineers, with a 4-year vesting schedule starting March 2025 and special provisions for accelerated vesting in case of an IPO."

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Document background
The Phantom Stock Agreement serves as a critical tool for Pakistani companies looking to attract and retain top talent without diluting actual equity ownership. This document type is particularly valuable when companies want to offer equity-like incentives but face restrictions on actual share transfers, or prefer to maintain existing ownership structures. The agreement, governed by Pakistani law, typically outlines the grant of phantom stock units, vesting conditions, valuation mechanisms, and payment terms. It must comply with various Pakistani regulations, including the Companies Act 2017, Securities Act 2015, and relevant tax laws. The document is commonly used in growth-stage companies, family-owned businesses, or subsidiaries of multinational corporations operating in Pakistan where traditional equity sharing might not be feasible or desired.
Suggested Sections

1. Parties: Identifies the company and the employee receiving phantom stock rights

2. Background: Explains the context and purpose of the phantom stock arrangement

3. Definitions: Defines key terms including Phantom Stock Unit, Vesting Period, Valuation Date, and Payment Events

4. Grant of Phantom Stock Units: Specifies the number of phantom stock units granted and their initial value

5. Vesting Schedule: Details the vesting timeline and conditions for the phantom stock units

6. Valuation Mechanism: Explains how the phantom stock units will be valued, including calculation methodology

7. Payment Terms: Specifies when and how payments will be made for vested phantom stock units

8. Rights and Limitations: Clarifies that phantom stocks do not constitute actual equity or voting rights

9. Tax Provisions: Addresses tax implications and responsibilities for both parties

10. Termination Provisions: Details what happens to phantom stock units upon various types of employment termination

11. Confidentiality: Establishes confidentiality obligations regarding the agreement terms

12. Governing Law: Specifies Pakistani law as governing law and relevant jurisdiction

13. General Provisions: Standard contractual provisions including amendments, notices, and entire agreement

Optional Sections

1. Change of Control: Addresses treatment of phantom stock units in case of company merger, acquisition, or restructuring

2. Non-Competition and Non-Solicitation: Include when additional restrictive covenants are desired

3. International Payments: Required when payments may involve foreign currency or cross-border transfers

4. Shareholder Approval: Include if corporate governance requires shareholder approval for the phantom stock plan

5. Dispute Resolution: Optional detailed arbitration or mediation procedures

6. Clawback Provisions: Include when company wants right to recoup payments under specific circumstances

7. Plan Administration: Include when establishing a committee or designated administrator for the phantom stock plan

Suggested Schedules

1. Schedule A - Phantom Stock Unit Details: Details of granted units, including grant date, initial value, and any special conditions

2. Schedule B - Vesting Schedule: Detailed breakdown of vesting dates and percentages

3. Schedule C - Valuation Methodology: Detailed formula and procedures for calculating phantom stock unit value

4. Schedule D - Payment Procedures: Step-by-step process for executing payments, including required documentation

5. Schedule E - Tax Calculations: Examples and methodology for tax calculations under Pakistani law

6. Appendix 1 - Definitions: Extended definitions and technical terms

7. Appendix 2 - Forms: Standard forms for exercise notices, beneficiary designations, and other required documentation

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
Relevant legal definitions



































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Relevant Industries

Technology

Financial Services

Manufacturing

Professional Services

Healthcare

Telecommunications

Real Estate

Energy

Retail

Education

Consulting

Pharmaceuticals

Software Development

E-commerce

Relevant Teams

Human Resources

Legal

Finance

Executive Leadership

Operations

Sales

Engineering

Product Development

Business Development

Strategy

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Chief Operating Officer

Senior Vice President

Vice President

Director

Senior Manager

Department Head

Key Account Manager

Technical Lead

Senior Engineer

Principal Consultant

Regional Manager

Business Unit Head

Senior Sales Executive

Industries







Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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