(Bloomberg) -- Shares of digital payments provider Paytm dropped the most in a fortnight after a proxy advisory firm asked shareholders to replace founder Vijay Shekhar Sharma as the company’s chief executive officer.

Shareholders should vote against Sharma’s reappointment, and the board must bring in a professional to the role, Institutional Investor Advisory Services India Ltd. recommended in a note ahead of the fintech firm’s Aug. 19 annual general meeting.

Before listing, Sharma, on several instances, publicly talked about the company turning profitable, and yet it hasn’t happened even at an operational level, the firm said. It also raised concerns over the current CEO’s ability to lead the company to profitability.

“It is a very positive development that proxy firms are questioning not only governance but also the performance of the key leaders,” said Abhay Agarwal, a fund manager at Piper Serica Advisors Ltd. “Once the confidence is lost in the ability of the senior management to make the right business decisions, it is quite natural that one should seek replacement of the same.”

A representative for Paytm declined to comment on IiAS recommendations. In a stock exchange filing earlier in the day, the company reported an 82% on-year increase in total merchant payments volume to about 1.06 trillion rupees ($13.3 billion) in July.

Paytm, listed on the bourses as One 97 Communications Ltd., fell as much as 6.2% and is on course for the third session of declines. Of the dozen analysts covering the firm, six have a buy rating, while three each recommend hold and sell on the stock. Ant Group Co.’s Antfin (Netherlands) Holding BV., SoftBank Group Corp. and Canada Pension Plan Investment Board are among the top shareholders in the company.

Here are the other recommendations made by IiAS on Paytm

  • Sharma has again moved the time line to achieve profits and promised operational profitability defined as EBIDTA before ESOP costs by the quarter ending September 2023. IiAS does not support the practice of a company devising its own definition of operational profitability
  • Shareholders should vote against the appointment of Ravi Chandra Adusumalli, the managing partner of Elevation Capital, to the board as he attended only 47% of board meetings in FY22
  • While recommending shareholders to vote for the reappointment of Madhur Deora as president and group chief financial officer for five years, IiAS opposed the proposed remuneration for him

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