Document background
The Phantom Equity Agreement is utilized when companies want to provide equity-like incentives without diluting actual shareholding or when share transfers are impractical due to regulatory, corporate, or strategic reasons. This document type is particularly relevant in the Nigerian business context where companies seek to attract and retain key talent while maintaining existing ownership structures. The agreement details the mechanism for calculating and distributing phantom equity benefits, including vesting schedules, valuation methodologies, and trigger events for payments. It ensures compliance with Nigerian corporate law, particularly the Companies and Allied Matters Act 2020, while addressing tax implications and employment law considerations. The document is especially useful for private companies, subsidiaries of multinational corporations, and businesses with restricted share transfer capabilities.
