On May 8, 2025, the Securities and Exchange Board of India (SEBI) announced a settlement with One97 Communications Ltd (Paytm), its founder and CEO Vijay Shekhar Sharma, and his brother Ajay Shekhar Sharma regarding violations related to the company’s Employee Stock Option Plans (ESOPs).

• Cancellation of ESOPs: SEBI directed Paytm to cancel 21 million ESOPs granted to Vijay Shekhar Sharma in October 2021 and approximately 223,000 ESOPs granted to Ajay Shekhar Sharma in May 2022.
• Three-Year ESOP Ban: Vijay Shekhar Sharma has been barred from accepting any new ESOPs from any listed company for a period of three years.
• Financial Penalties:
• Both Paytm and Vijay Shekhar Sharma agreed to pay ₹1.11 crore each as part of the settlement.
• Ajay Shekhar Sharma paid ₹57.11 lakh and was directed to disgorge ₹35.86 lakh, representing gains from the sale of shares obtained through the exercised ESOPs.

SEBI’s investigation revealed that Vijay Shekhar Sharma was listed as a promoter in company filings prior to FY 2020-21. However, just days before Paytm filed its IPO documents in July 2021, he reclassified himself as a non-promoter and transferred a portion of his equity to a family trust under his control. This maneuver allowed him to retain effective control over more than 10% of the company’s equity while becoming eligible for a substantial ESOP allotment, actions that SEBI deemed as circumventing its regulations.

SEBI also noted that Vijay Shekhar Sharma, in his capacity as Managing Director, had significant influence over the Nomination and Remuneration Committee’s decisions, including the approval of ESOP grants to himself and his brother.

The settlement was reached without admission or denial of guilt by the parties involved.

Sources