Eight former board members of One97 Communications, the parent company of Paytm, were granted permission by the Securities and Exchange Board of India (Sebi) on Friday to pay ₹3.3cr for the non-disclosure of material information. The former compliance officer and seven other former directors made up the eight board members. They had submitted a settlement request without acknowledging or disputing the factual and legal conclusions.
Sebi's advisory committee proposed the settlement amount, which was officially approved by a panel of full-time members.
The matter was resolved as a result of the settlement.
Individuals Involved in Violation
The eight individuals involved include seven independent and non-executive nominee directors: Ashit Ranjit Lilani, Neeraj Arora, Douglas Feagin, Munish Varma, Ravi Chandra Adusumalli, Mark Schwartz, and Pallavi Shardul Shroff, as well as one Compliance officer and company secretary Amit Khera (who resigned in March 2023).
All of these individuals were members of the Nomination and Remuneration Committee (NRC), which determined the benefits provided to the company's managing director and CEO, Vijay Shekhar Sharma, and his families.
The Allegations
The Sebi began adjudication procedures against One97 Communications for suspected violations of LODR (Listing Obligations and Disclosure Requirements) norms and ICDR (Issue of Capital and Disclosure Requirements) regulations.
It was alleged that independent directors who served on the Nomination and Remuneration Committee (NRC) violated the 2015 LODR Regulations by failing to carry out their responsibilities impartially and independently when making decisions that would have benefited the company's CEO and MD, Vijay Shekhar Sharma, and his family.
These directors allegedly violated ICDR regulations by approving and signing offer documents that contained false representations and insufficient disclosures.
In breach of the ICDR Regulations, other directors signed offer documents that contained false information and insufficient disclosures about the company, which was a competently run business without a named promoter, but the company had promoter Sharma.
On top of that, Sebi said that when Schwartz, Shroff, Feagin, Varma, and former compliance officer Khera filed for Paytm's first public offering (IPO), they had misrepresented the company's promoter position.
The Background
Sebi issued several notices to Paytm last year. The market regulator sent the fintech giant a show-cause notice on July 19 about the 2.1 Cr ESOPs that Sharma was given during the fiscal year 2021–2022 (FY22).
Sharma and other board members who were involved in Paytm's IPO received show-cause notices from the regulator a month later for allegedly misrepresenting facts in the prospectus. The business explained at the time that it was in "regular communication" with Sebi and making the required representations in relation to this issue.
