Sebi accepted revised terms proposed by Sharma, his brother Ajay Shekhar Sharma and One97 Communications Ltd (OCL), closing enforcement proceedings without admission or denial of guilt, according to the settlement order dated 8 May. Under the agreement, Vijay Shekhar Sharma has been barred from accepting Esops from any listed company for three years.

The regulator’s probe centered around 2.1 crore Esops granted to Sharma in October 2021 and over 2.2 lakh options given to his brother in May 2022 after Sharma allegedly declassified himself as a promoter just days before Paytm filed its initial public offering (IPO) documents.

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Sebi noted that Sharma, who had earlier been disclosed as a promoter of the company in filings with the Registrar of Companies, reclassified himself as a non-promoter on 12 July 2021—just three days before the IPO filing.

The regulator alleged that this move, coupled with the transfer of a portion of Sharma’s equity to a family trust controlled by him, allowed him to retain effective control while becoming eligible for a large Esop allotment—something restricted under Sebi’s share based employee benefits regulations for promoters holding more than 10% stake.

The settlement terms include the cancellation of all such unexercised Esops granted to the Sharma brothers. Additionally, Sharma will pay a monetary settlement of ₹1.11 crore and One97 Communications will pay a similar amount. Ajay Sharma will pay ₹57.11 lakh and disgorge gains of ₹35.86 lakh from the sale of shares obtained through the exercised Esops.

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Sebi’s order emphasized the importance of transparency and fairness in the administration of employee benefit schemes, particularly in the run-up to public issues. “OCL and Mr. Vijay Shekhar Sharma made incorrect disclosures in the offer documents by disclosing Mr. Vijay Shekhar Sharma as a non-promoter public shareholder,” Sebi observed.

In its settlement process, the regulator’s high-powered advisory committee and anel of whole-time members cleared the revised terms submitted in January and March 2025, respectively. The applicants remitted their settlement and disgorgement amounts in April, following which Sebi issued the closure order.

While the settlement closes this chapter of regulatory action, Sebi has reserved the right to reopen proceedings, if any representation made during the process is found to be untrue or if the applicants breach any conditions of the settlement.

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Paytm, which debuted on the Indian stock exchanges in November 2021 with a ₹18,300 crore public issue, has faced scrutiny over its business model, profitability and governance since listing.