Paytm Founder Vijay Shekhar Sharma Settles IPO Case With SEBI
Why in the news
Paytm’s founder, his brother and the parent company One97 Communications settled a SEBI case concerning factual misstatement and wrong shareholder classification around the Paytm IPO.
Key facts
- Total settlement amount: Rs 2.79 crore.
- Vijay Sharma: gave up 21 million ESOPs (granted 2019); no new ESOPs for three years.
- Ajay Sharma: gave up 225,000 stock options; to disgorge Rs 35 lakh.
- Settlement route lets parties resolve breaches without admitting or denying guilt, by paying a fee or taking corrective steps.
The alleged violation
- Vijay listed himself as a non-promoter at the IPO, which made him eligible for ESOPs; promoters cannot receive them under SEBI rules.
- SEBI held he should have been classed as a promoter.
- His 14.7% holding at IPO time was later cut below 10% by moving 30.9 million shares to the Sharma Family Trust.
- Independent directors were also questioned for backing his stance.
Impact on One97
- The forfeited ESOPs were cancelled and went back to the pool under the One97 Employees Stock Option Scheme, 2019.
- This brings a non-cash ESOP expense acceleration of Rs 492 crore in Q4 FY25, with an equal cut in future ESOP expense.
About ESOP
An Employee Stock Ownership Plan lets employees buy company shares, often at a discount or after a vesting period, making them part-owners.
Exam angle
- Regulator: SEBI; Paytm’s parent: One97 Communications.
- Counsel: Finsec Law Advisors for One97; Regstreet Law for the Sharma brothers.
- Concept: settlement mechanism, disgorgement, promoter classification.