Document background
Shadow Equity Agreements are increasingly utilized in Pakistan's growing business ecosystem as a strategic tool for talent retention and motivation. This document type is particularly valuable for companies that want to offer equity-like incentives without diluting actual shareholding or when share transfers are restricted by local regulations or company policy. The agreement typically details the number of shadow equity units granted, vesting conditions, valuation methods, and payment triggers, all structured within the framework of Pakistani corporate and employment law. It's especially relevant for startups and growing companies that need to attract top talent but may not be ready for actual equity distribution. The Shadow Equity Agreement must carefully navigate Pakistani securities regulations while providing clear mechanisms for calculating and distributing phantom equity benefits.
