Fintech firm One97 Communications' top official Vijay Shekhar Sharma effectively controls 24.3 per cent voting rights in the company, investors' advisory firm IiAS said in a report.
Institutional Investor Advisory Services in the report said that Sharma should formally signal that he remains in control and give investors the comfort that he is the promoter and not someone who is "sitting in the shadows".
The recent no-cash transaction between Alibaba group firm Antfin (Netherlands) Holding BV (Antfin) and Sharma raised his stake in the company to 19.42 per cent.
Antfin, however, continues to hold the economic rights of the stake that is being transferred to Sharma.
IiAS said that a further 4.88 per cent equity is held by the Sharma Family Trust in the name of Axis Trustee Services.
"We continue to believe that Vijay Shekahr Sharma will have influence over how the 4.88 per cent equity held by the trust will vote on shareholder resolutions, giving him effective control of 24.3 per cent of the voting rights," the report said.
Sharma is at present Chairperson, Managing Director and CEO of Paytm.
The advisory firm said that despite the significant erosion in shareholder wealth from the listing price or that the company burns cash and is yet to show profitable growth, or that many believe he is overpaid, investors have not soured on him.
"Vijay Shekhar Sharma is the present Chairperson, Managing Director and CEO, as a director, he is not liable to retire by rotation, and he has the right to a board seat for as long as he holds an executive capacity. He has remained central to the various shareholders' agreements since the time the company embarked on its current journey," the report said.
In January, IiAS had questioned Sharma's eligibility to get stock option even though he enjoys rights similar to that of a promoter.
"Vijay Shekhar Sharma is the founder of Paytm, but not its promoter. He is a non-retiring director, chairs Paytm's board and has a right to a board seat if he holds at least 2.5 per cent of the company's equity. As a non-promoter, he receives stock options. Put differently, Vijay Shekhar Sharma enjoys the rights akin to that of a promoter and not its responsibilities and restrictions," IiAS had said.
The advisory firm further said that One 97 Communications Limited is one of the several listed startups that have not classified their founders as promoters and the trend is typically seen in companies that have private equity investors in their pre-IPO cap-table.
"These founders enjoy several of the perks that promoters have, including board permanency, board control, and management leadership. There is one major difference. They can be granted stock options that promoters cannot get under Indian regulations, and their equity holdings do not carry the restrictions as those classified as promoters," the firm had said.
An email query sent to Paytm elicited no immediate reply.