Directed by Vijay Shekhar Sharma Online paymentthrough its parent company One 97 Communications Ltd., has issued a clarification regarding reports of a show cause notice from the Securities and Exchange Board of India (Secretary of Biological Education).
The notice reportedly involves alleged misrepresentation of facts during Paytm’s initial public offering (IPO) in November 2021.
However, Paytm stressed that this is not a new issue and had already been disclosed in its financial statements for the fiscal year ended March 31, 2024 and the quarter ended June 30, 2024.
Official response from the company
In an official filing with the Bombay Stock Exchange (BSE), Paytm said, “With reference to recent media reports, we would like to inform you that this is not news as the Company had already made relevant disclosures on this matter in its financial results for the quarter and year ended March 31, 2024 as well as the quarter ended June 30, 2024.”
The company also clarified that there has been no impact on its financial results for the prior quarters ended June 30, 2024 and March 31, 2024, respectively.
SEBI’s allegations and Paytm’s legal position
The SEBI notice reportedly questions the classification of Paytm CEO Vijay Shekhar Sharma as a promoter.
The regulator maintains that Sharma’s management control should have led to him being classified as a promoter, which would have disqualified him from receiving employee stock options (ESOP) grants after the IPO. The notice also extends to board members who served during the IPO, alleging that they failed to ensure compliance with promoter classification norms.
However, Paytm claims that it is in regular communication with SEBI and is taking necessary steps regarding this matter. The company mentioned that it has obtained an independent legal opinion, which supports its compliance with the relevant regulations.
Recent media reports
The matter came into focus after a Moneycontrol report highlighted SEBI’s concerns. The report mentioned that the investigation was initiated based on inputs from the Reserve Bank of India (RBI), which had scrutinised Paytm Payments Bank earlier this year.
This SEBI notice is part of a series of regulatory challenges that Paytm has faced recently. Earlier this month, the Office of the Collector of Stamp Duty in New Delhi imposed a fine of Rs 47.12 lakh on One 97 Communications for not paying stamp duty on equity shares.
Additionally, the Financial Intelligence Unit of India (FIU-IND) fined Paytm Payments Bank Rs 5.49 crore for violations of the Prevention of Money Laundering Act.
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