Paytm's 7 Ex-directors, Compliance Officer Pay Over Rs3.74 Crore to Settle Case with SEBI

Moneylife Digital Team 17 January 2025

Investor Interest

Seven former directors of One97 Communications Ltd (Paytm) and a former compliance officer and company secretary paid over Rs3.75 crore to settle a case of regulatory violations with market regulator Securities and Exchange Board of India (SEBI).

Those who paid the settlement amount include Amit Khera (then compliance officer and company secretary), Ashit Ranjit Lilani (then independent director-ID), Neeraj Arora (then ID), Douglas Feagin (then non-executive nominee director), Munish Varma (then non-executive nominee director), Ravi Chandra Adusumalli (then non-executive nominee director), Mark Schwartz (then ID) and Pallavi Shardul Shroff former ID of Paytm.

In its show cause notice (SCN), SEBI alleged that independent directors being part of NRC failed to discharge duties with an unbiased and independent approach while decision-making from matters involving benefits to Vijay Shekhar Sharma, managing director and chief executive officer (MD&CEO) of Paytm and his relatives, in violation of Regulation 4 (2) of Listing Obligations and Disclosure Requirements (LODR) Regulations, 2015. "Directors approved and signed offer documents containing incorrect statements and incomplete disclosures, in violation of Regulation 245(1) and (2) of Issue of Capital and Disclosure Requirements (ICDR) Regulations, 2018."

Further, SEBI says these directors, being part of board of directors as on the date of the prospectus, authorised and signed offer documents containing incorrect statements and incomplete disclosures about the company being professionally managed and having no identifiable promoter, whereas Paytm has a promoter, Mr Sharma, in violation of Regulation 245(1) and (2) of ICDR Regulations, 2018.

Amar Navlani, adjudicating officer (AO) of SEBI, passed the settlement order stating that the market regulator will not initiate any other enforcement action against these eight people for violations mentioned in the SCN.

However, during the pendency of the adjudication, the seven former directors and Mr Khera filed settlement applications under the SEBI (Settlement Proceedings) Regulations, 2018, seeking to resolve the matter without admitting or denying the findings.

The settlement applications were reviewed by SEBI's internal committee (IC) on 27 August 2024, which recommended monetary settlement terms for the applicants.

Revised settlement terms were submitted by the seven former directors and Mr Khera in early September 2024. Two IDs, Mr Lilani and Mr Arora, agreed to pay a settlement amount of Rs53.62 lakh each.

Additionally, Rs42.90 lakh each was agreed from non-executive directors Mr Schwartz, Ms Shroff, Mr Feagin, Mr Varma and Mr Adusumalli, and Rs11.05 lakh from compliance officer Mr Khera.

Comments