SEBI Gives Notice to Paytm Founder, Director on IPO Breaches

Markets regulator SEBI has issued a show cause notice to the founder and other board members of financial services company Paytm for alleged irregularities in the company’s initial public offer (IPO) launched about three years ago. In this notice, a reply has been sought for giving incorrect information of facts.

Paytm founder Vijay Shekhar Sharma was described as an employee of the company in the documents filed for this IPO, whereas he should have been placed in the category of large shareholders who can influence the company’s decisions. According to a media report, SEBI has questioned the then directors of the company regarding this. According to the stock exchange data, Sharma was described as a public shareholder instead of a large shareholder. In these documents, it was told that there are no investors in the category of large shareholders of Paytm. Regarding this, Paytm has said, “The company is in regular contact with SEBI regarding this matter.” Along with this, the company has told that information about this notice was given in the filing of quarterly results.

SEBI alleges that the 2.1 crore employee stock options (ESOPs) given to Sharma violate its rules for providing share-based employee benefits. Under these rules, large shareholders with the ability to influence the company’s decisions cannot have ESOPs. SEBI did not respond to a Reuters request for comment.

Earlier this year, the Reserve Bank of India (RBI) had ordered the closure of Paytm’s banking unit Paytm Payments Bank Limited (PPBL). This was a big blow to the company. After this, Paytm’s stock fell sharply. In the fourth quarter of the last financial year, the revenue of One 97 Communications, which runs Paytm, fell by 2.6 percent for the first time since listing. The company’s revenue was around $22.7 billion. The Financial Intelligence Unit (FIU) imposed a penalty of more than Rs 5 crore on PPBL in March. The reason for this was violations in reporting illegal amounts sent through PPBL’s accounts.

(This news has not been edited by the NDTV team. It has been published directly from the Syndicate feed.)