SEBI Settles ESOP Matter With Paytm Parent, CEO Vijay Shekhar Sharma, Brother

The Securities and Exchange Board of India has settled the matter of employee stock ownership plan with One97 Communications Ltd., its Chief Executive Officer Vijay Shekhar Sharma and his brother Ajay Shekhar Sharma, as per an order issued on Thursday.

According to the revised settlement terms, Vijay Shekhar Sharma will not accept any fresh ESOPs from any listed company for three years from the date of the settlement order, and and settlement amounts to Rs 1.11 crore.

His ESOPs worth Rs 2.10 crore stands cancelled. SEBI also said that it will not initiate any further enforcement action against all three in the matter.

For Chief Business Officer Ajay Shekhar Sharma, ESOPs worth Rs 2.22 crore stands cancelled and the settlement amounts to over Rs 57 lakh.

Last month, Vijay Shekhar Sharma had voluntarily forgone all 2.1 crore ESOP units granted to him. One 97 Communications had then informed the exchanges that he had written a letter to the company, seeking to forego all of his ESOP units with "immediate effect".

The request was approved by the nomination and remuneration committee of the company's board in a meeting held during the day.

This will result in a one-time, non-cash, acceleration of ESOP expense of Rs 492 crore in the quarter ended March 31, 2025, and an equivalent lowering of ESOP expenses in future years, the company had said.

Notably, in 2024, SEBI had issued a show-cause notice to Paytm over the ESOP units granted to Sharma, the company's founder and CEO, prior to its initial public offering.

Sharma was issued the 2.1 crore ESOPs, with the intent of vesting them equally over the next five years, in financial year 2021-22. The payments firm went public during the same fiscal.

SEBI's scrutiny in the matter centred around Sharma's status as a public shareholder in Paytm. As per the market regulator's norms, ESOPs are strictly prohibited to be issued to promoters.

The alleged violation of norms in granting of ESOPs to Sharma was flagged in January 2023 by Institutional Investor Advisory Services India Ltd. The proxy advisory firm questioned whether rules were circumvented in the matter by the startup.

Paytm, in an exchange filing in August last year, had stated that it believes to be in compliance with all the norms related to the matter. "Based on an independent legal opinion obtained by the management, it believes that the company is compliant with the relevant regulations," it had said.

As per the shareholding available at the end of March 2025, Sharma holds a 9.1% direct stake in the company. He also holds a 4.87% stake through a trust managed by Axis Trustee and also controls 10.27% of stake through Resilient Asset Management BV in agreement with Antfin (Netherlands) Holding BV.

Overall, Sharma directly and indirectly holds 24.24% equity stake in One97 Communications.

Notably, Paytm last year felt the wrath of regulatory action against its banking arm – Paytm Payments Bank, which was was pulled up by the Reserve Bank of India in January 2024 for non-compliance with norms. The move had had impacted the company's wallet and banking services, apart from hammering its stock.