Paytm, led by Vijay Shekhar Sharma and through its parent company One 97 Communications Ltd., has issued a clarification about reports concerning a show-cause notice from the Securities and Exchange Board of India (SEBI).

The notice reportedly concerns alleged misrepresentation of facts during Paytm's Initial Public Offering (IPO) in November 2021. However, Paytm clarified that this is not a new issue, as it had already been disclosed in its financial statements for the fiscal year ending March 31, 2024, and for the quarter ending June 30, 2024.

Paytm has informed the Bombay Stock Exchange (BSE) through a formal filing that recent media reports are not novel since appropriate disclosures concerning this matter were already made in its financial results for March 31, 2024 quarter and year as well as June 30, 2024 quarter.

The company confirmed that its financial results for the prior quarters ending on June 30, 2024 and March 31, 2024 have not been affected.

It has been reported that SEBI's notice is scrutinizing the categorization of Vijay Shekhar Sharma, CEO of Paytm, as a promoter.

According to the regulator, Sharma's management control implies that he should have been categorized as a promoter. This would make him ineligible for employee stock options (ESOPs) following the IPO. The notice also holds board members who served during the IPO responsible for not ensuring adherence to promoter classification standards.

Paytm, however, states that it is in ongoing communication with SEBI and is providing the necessary representations on this issue. The company also noted that it has sought an independent legal opinion, which confirms its adherence to relevant regulations.

SEBI's concerns regarding the issue came to light following a report by Moneycontrol. The said probe was initiated on the basis of inputs from Reserve Bank of India (RBI), which had scrutinized Paytm Payments Bank earlier in the year, as mentioned in the report.

Paytm has recently encountered a series of regulatory obstacles, with this SEBI notice being one of them. In addition to that, earlier this month One 97 Communications was charged Rs 47.12 lakh by the Office of Collector of Stamps in New Delhi for failing to pay stamp duty on equity shares.

The FIU-IND imposed a fine of Rs 5.49 crore on Paytm Payments Bank due to its contraventions of the Prevention of Money Laundering Act.

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