Phantom shares plan (Spain)

curl -X POST https://dealroom.todo.law/api/v1/agent/contracts \
  -H "Authorization: Bearer drk_YOUR_KEY" \
  -H "Content-Type: application/json" \
  -H "Idempotency-Key: $(uuidgen)" \
  -d '{
    "contractType": "PHANTOM_SHARES_PLAN",
    "language": "es",
    "party": {
      "legalName": "Your company"
    },
    "counterparty": {
      "legalName": "The other company"
    },
    "terms": {
      "company-name": "<company-name>",
      "cif": "<cif>",
      "total-pool-percentage": "<total-pool-percentage>",
      "cliff-months": "<cliff-months>",
      "vesting-months": "<vesting-months>",
      "plan-effective-date": "2026-11-01",
      "payment-term-days": "<payment-term-days>"
    },
    "inline": "md"
  }'

What it is and when it is used

A phantom shares plan (in Spanish, plan marco de participaciones fantasma) lets a Spanish company reward key employees, managers and collaborators with a payment linked to the company's value, without issuing real shares. Each phantom share gives a right to receive, on a defined liquidity event, an amount equal to the value of one participación. Holders do not become members, have no voting or attendance rights and cannot transfer their units.

The plan is the framework document. It is approved once by the company's competent body and sets the general rules: pool size, vesting, liquidity events, valuation, leaver rules, tax, governance and eligibility. The company then signs an individual phantom shares grant with each beneficiary. Because no real shares are issued, the skill notes that the plan does not require amending the articles of association or a public deed, although it does need approval by the board or the general meeting, as the articles provide.

Who signs it and in which role

• The Company establishes and approves the plan, administers it through its board (choosing beneficiaries, approving grants, interpreting the plan and setting the valuation) and pays the amounts due.
• The Beneficiaries are individuals who receive a grant under the plan. The plan has a signature line for a beneficiary where one signs it, but each person joins through their own grant agreement.

The company fills in its name, tax identification number (CIF), the pool percentage, the cliff and vesting periods in months, the plan's effective date, the number of days it has to pay after a liquidity event, the city whose courts hear civil disputes (Madrid by default) and, optionally, the maximum percentage to which the board may enlarge the pool.

Key clauses

Pool size

The pool is 5%, 10% or 15% of the company's economic value. It caps the total of all grants. The board may enlarge it up to a stated maximum after telling the members.

Vesting schedule and cliff

Units vest monthly in equal parts, quarterly, or annually tied to targets or milestones. The cliff is 6 months, 12 months (described as the market standard) or none; at the end of the cliff the units accrued so far vest at once.

Liquidity events

The right to payment arises only on a sale or change of control; on a sale, change of control or stock market listing; or also on secondary market transactions the company authorises.

Valuation method

The recommended method for an exit is the price per participación the members actually receive, after deducting debt, costs and escrow amounts and applying investors' liquidation preferences; escrow and deferred amounts are paid to beneficiaries when the members receive them. The alternatives are the valuation of the last funding round, a valuation by an independent expert, or a set formula based on financial metrics. The skill warns that these formula methods can differ from what members really receive in a sale and suits them to intermediate payments not linked to an exit.

Settlement and exercise window

The recommended option is automatic settlement: once the event occurs, the company notifies the beneficiary of the amount within fifteen days and pays within the agreed number of days, and silence by the beneficiary does not affect the right. The alternatives are exercise windows of 30, 90 or 180 days; for employees, missing the window leads to payment by default, not loss of the right.

Leaver conditions

Good leavers (for example death, permanent incapacity, unfair dismissal or retirement) keep their vested units. For bad leavers (for example resignation, fair disciplinary dismissal or serious breach) the options are: lose everything, vested and unvested; lose only unvested units; or a scale with an intermediate "regular leaver" category keeping a set percentage. Unvested units always lapse on leaving.

Tax treatment

The company withholds and pays the tax; the beneficiary handles their own tax; or the company handles mandatory withholding and the beneficiary the rest. The skill states that the company's withholding duty for employment income cannot be removed by agreement, whichever option is chosen.

Governance and amendment

The board may amend the plan alone; substantial changes need prior consultation with affected beneficiaries; or they need the consent of a supermajority of them. In every option, vested rights are protected.

Directors as beneficiaries

Directors are excluded (the recommended default), or admitted only after the articles of association, a general meeting resolution and, for executive directors, a contract approved by two thirds of the board are in place. Without that, a grant would be ineffective.

The fixed terms also cover the legal nature of the units, eligibility, communications, data protection, and Spanish provisions on salary nature, tax, social security and anti-money laundering checks.

What the two sides usually negotiate

The company generally prefers a smaller pool, vesting tied to milestones, payment only on an exit, a formula valuation, a short exercise window, loss of all units for a bad leaver, the beneficiary handling their own tax and freedom to amend the plan. Beneficiaries generally prefer a larger pool, a short or no cliff, more liquidity events including secondary sales, a long window, a graded leaver scale and a supermajority for amendments.

When the two sides disagree, Dealroom proposes the balanced positions in the skill:

• Pool: 10%.
• Vesting: monthly or quarterly.
• Cliff: 12 months.
• Liquidity events: sale, change of control or listing.
• Valuation: the real exit price, the last round or an independent expert.
• Settlement: a 90-day window, with automatic settlement very close to neutral and recommended by the skill.
• Leavers: a bad leaver loses only unvested units.
• Tax: the company withholds, alone or with shared responsibility.
• Governance: board decision with prior consultation of beneficiaries.
• Directors: admitted only with the corporate approvals in place, with exclusion almost as neutral.

Jurisdictions and languages Dealroom supports for it

Dealroom drafts the plan under Spanish law only, in Spanish only. This page explains it in English, but the plan itself is produced in Spanish. The plan can be prepared by the company alone or negotiated with a counterpart.

Disputes with employees that arise from the employment relationship belong to the labour courts under article 2 of the Ley 36/2011, and no choice of court can exclude that. The chosen city's civil courts apply only to beneficiaries with a purely commercial relationship and to other civil or commercial matters. If the company would rather grant real equity, see the equity incentive plan.

Common mistakes

• Taking away vested units from employees. Payments may be treated as salary under article 26 of the Estatuto de los Trabajadores, and loss of vested rights is exposed to being set aside or reduced.
• Making payment depend on the employee claiming it. Forfeiture by silence is high risk for employees; automatic settlement avoids it.
• Using a formula to value an exit. It may ignore debt, escrows and liquidation preferences and pay more or less than the members receive.
• Staggering payments. The 30% reduction requires imputation to a single tax period; annual or staggered settlements can lose it.
• Expecting start-up tax benefits. They do not apply to cash-settled incentives.
• Granting units to directors without corporate approvals. The grant is exposed to being ineffective and to restitution.
• Choosing an exclusive civil court for employees. It cannot exclude the labour courts.