Paytm, led by Vijay Shekhar Sharma, has clarified its stance on a show-cause notice issued by the SEBI (Securities and Exchange Board of India). The notice involves alleged misrepresentation of facts during Paytm’s Initial Public Offering (IPO) in November 2021. However, the company, under its parent entity One 97 Communications Ltd., reassures that this issue is not new and had already been disclosed in their previous financial statements.
Paytm Official Statement
In an official filing with the Bombay Stock Exchange (BSE), Paytm addressed the recent reports regarding SEBI’s investigation. Paytm emphasized that these allegations were previously covered in their financial reports for the fiscal year ending March 31, 2024, and the quarter ending June 30, 2024.
Paytm stated, “This is not a new development, 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 quarters mentioned, despite the ongoing SEBI inquiry.
SEBI Allegations and Paytm’s Position
The SEBI notice raises questions about the classification of Vijay Shekhar Sharma, Paytm’s CEO, as a promoter during the IPO. SEBI claims that Sharma’s management control should have led to his classification as a promoter, disqualifying him from receiving Employee Stock Options (ESOPs) post-IPO. The notice also highlights a lack of compliance with promoter classification norms by board members serving during the IPO.
Paytm has reassured investors and stakeholders that it is in regular communication with SEBI and is making necessary representations. The company also mentioned that it has obtained an independent legal opinion that supports its compliance with relevant regulations, further defending its position in this ongoing matter.
Background of the Issue
The issue attracted media attention after a report from Moneycontrol highlighted SEBI’s concerns. According to the report, the investigation began after the Reserve Bank of India (RBI) conducted a review of Paytm Payments Bank earlier this year.
This SEBI notice is one of several regulatory challenges Paytm has faced recently. Earlier this month, One 97 Communications received a penalty of Rs 47.12 lakh from the Office of the Collector of Stamps, New Delhi, for failing to pay stamp duty on equity shares.
In addition, the Financial Intelligence Unit-India (FIU-IND) fined Paytm Payments Bank Rs 5.49 crore for violations of the Prevention of Money Laundering Act.
Paytm continues to work closely with SEBI, ensuring full compliance and transparency regarding the ongoing investigation. Despite these challenges, the company remains confident in its legal standing, backed by independent opinions and clear disclosures made in prior financial statements.
As Paytm navigates these regulatory hurdles, it assures stakeholders that it will continue to focus on compliance and addressing the concerns raised by SEBI and other regulatory bodies.
