SEBI to form high-level panel to review conflict of interest rules for board members
The approval came during SEBI’s first board meeting under its new chairperson, Tuhin Kanta Pandey.
The Securities and Exchange Board of India (SEBI) has reportedly issued show-cause notices to Paytm Founder and CEO, Vijay Shekhar Sharma, and erstwhile board members of One 97 Communications Ltd (Paytm’s parent company), over alleged misrepresentation of facts during the company’s initial public offering (IPO) in November 2021.
Paytm shares declined as much as 9 per cent during the intra-day trading and closed 4.48 per cent down at Rs 530 apiece. The average of 12-month analyst price targets implies a potential downside of 16 per cent.
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According to multiple reports citing sources, the SEBI notices also allege non-compliance with promoter classification norms.
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The markets regulator probed Paytm Payments Bank after receiving inputs from the Reserve Bank of India (RBI).
Paytm of SEBI did not immediately respond to reports.
Sharma apparently enjoys the rights of a promoter without the responsibilities and restrictions, according to a recent blog post by Institutional Investor Advisory Services Ltd.
In 2023, the Institutional Investor Advisory Services raised questions on Sharma’s stake in the parent firm, as well as the employee stock options granted to him by the company ahead of the IPO.
The latest SEBI notice may make it difficult for Paytm to get its payment aggregator licence reinstated.
Paytm recently got a government nod to apply for the licence after it assured authorities that the funds in Paytm Payments Services accounts are not from foreign sources.
Sharma is the founder and CEO of One97 Communications Ltd, but is not classified as promoter, according to stock exchange disclosures.
As a non-retiring director, Sharma chairs the company’s board and has the right to a board seat if he holds at least 2.5 per cent stake. He would’ve also not been granted the ESOPs had he been classified as a promoter.
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