Payments firm Paytm and its founder and CEO Vijay Shekhar Sharma have settled an employee stock options violations case with the Securities and Exchange Board of India, the markets regulator said on Thursday.
As part of the settlement, Sharma has been prohibited from accepting fresh employee stock options (ESOPs) from any listed company for three years, while Paytm and Sharma each paid Rs 11.1 million ($129,884) each, SEBI said.
Last August, the SEBI determined that the grant of 21 million ESOPs to Sharma violated its rules governing share-based employee benefits. As per Indian rules, large shareholders who can influence company decisions cannot hold ESOPs.
Consequently, last month, Sharma had foregone these ESOPs and as a result, Paytm took a related Rs 4.92 billion one-time charge in the previous quarter.
Sharma owned a 14.7% stake in Paytm a year before the company went public in 2021. To become eligible for ESOP grants, he reduced his shareholding to 9.1% by transferring 30.97 million shares to Axis Trustee Services, which acted on behalf of the Sharma family trust.
Sharma's brother, Ajay Shekhar Sharma, also settled with SEBI in the same case by cancelling the stock options granted to him.
