New Delhi: One97 Communications, the parent company of fintech giant Paytm, addressed reports regarding the show-cause notice issued to the company. The firm clarified that this notice was not a new development, as it had already disclosed the related information in its financial statements for the quarters ending in March and June 2024.
📢 Media Advisory: In response to recent media reports regarding the SEBI notice, we want to clarify that this is neither a new notice nor a new development. We had already disclosed this matter in our financial results for the quarter and year ending March 31, 2024, as well as…
— Paytm (@Paytm) August 26, 2024
In its statement, One 97 Communications emphasized that the show-cause notice did not affect the company’s financial performance. “We want to clarify that this is neither a new notice nor a new development. We had already disclosed this matter in our financial results for the quarter and year ending March 31, 2024, as well as the quarter ending June 30, 2024.,” the company assured in its filing.
The company provided detailed references to its earnings reports for these periods, specifying exact page and paragraph numbers where the relevant information about the notice had been disclosed. This step was taken to reaffirm its transparency and ensure that investors and stakeholders were fully informed about the matter.
The Securities and Exchange Board of India (SEBI) took a strong stance against Vijay Shekhar Sharma, the founder and CEO of One97 Communications Ltd., which operates as Paytm, along with several board members who were in office during the company’s IPO in November 2021. SEBI issued show-cause notices, raising serious concerns about alleged misrepresentation in the company’s IPO documents.
At the core of SEBI’s inquiry is whether Sharma should have been classified as a promoter rather than an employee when Paytm filed its IPO documents. Sharma, who exercised management control over the company, reportedly transferred a portion of his shares to a family trust, VSS Holdings Trust, just before the IPO filing. This reduced his direct stake in One97 Communications to below 10%, a key threshold for promoter classification under SEBI regulations.
Despite this transfer, SEBI’s notice points to the fact that Sharma maintained significant control over the company, questioning the legitimacy of his non-promoter classification. The regulatory body has also put the spotlight on the board members who endorsed this classification, holding them accountable for their role in the filing process.
Recently, the company secured government approval to reapply for its payment aggregator license, following assurances that funds in Paytm Payments Services accounts were not sourced from foreign entities.
