Document background
The Shadow Equity Agreement is a strategic document used by Malaysian companies to create incentive structures that align key personnel interests with company performance without diluting actual shareholding. This agreement type is particularly valuable for private companies, startups, and growing businesses operating under Malaysian jurisdiction who wish to attract and retain talent while maintaining control over their cap table. The document comprehensively covers the grant of shadow equity units, their vesting schedule, valuation methodology, trigger events for payment, and termination provisions, all while ensuring compliance with Malaysian corporate and employment laws. It's especially relevant in situations where traditional equity sharing might be impractical due to shareholder restrictions, regulatory requirements, or corporate structure considerations.
