Document background
Shadow Equity Agreements are utilized in Indonesia when companies wish to provide key employees or contractors with economic rights similar to actual equity ownership, without transferring real shares. This approach is particularly valuable in Indonesian companies where direct foreign ownership may be restricted, or where companies want to maintain existing shareholding structures while still offering equity-like incentives. The document typically includes comprehensive details about the shadow equity units, vesting schedules, valuation methods, and payment triggers, all structured to comply with Indonesian corporate law, employment regulations, and tax requirements. These agreements are especially popular among startups and growing companies looking to attract and retain talent while maintaining control over their cap table.
