One97 Communications, the parent company of fintech platform Paytm, on Monday clarified that the show-cause notice to the company as reported by the media was not a new development and the company has already made the required 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 further stated that “there is no impact on the financial results for previous quarters ended June 30, 2024, and March 31, 2024, respectively”.
“We are committed to taking all necessary steps to ensure continued adherence to regulatory requirements and remain dedicated to transparency and compliance in all our actions,” the company said.
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The clarification comes after stock exchanges sought clarification from Paytm after media reports stated that SEBI issued show-cause notices to Vijay Shekhar Sharma and board members who served during its initial public offering (IPO) in November 2021 for alleged misrepresentation of facts.
The show-cause notice is related to Sharma’s classification as a promoter, despite holding management control rather than just being an employee when filing the IPO documents. According to SEBI regulations, promoters of the company cannot receive employee stock options (ESOPs) after the listing. An investigation was launched based on inputs from the Reserve Bank of India (RBI), which had earlier imposed restrictions on the Paytm Payments Bank.
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One97 Communications shared links to its earnings over the March and June quarter where it specified the page and paragraph numbers on which it said that it had disclosed the information about the issues pointed out in the media reports.
"The company during year ended March 31, 2022 granted 21,000,000 Employee Stock Options to Managing Director and CEO of the Company which is subject to achievement of specified milestones. During the previous quarter, the Company had received a Show Cause Notice ("SCN") from SEBI related to the above options regarding compliance with SEBI SBEB Regulations,” the July 19, 2024 filing said.
According to the company, it had submitted its preliminary response and is in the process of seeking further information from SEBI in this regard. Based on an independent legal opinion obtained by the management, it believes that the company is compliant with the relevant regulations.
Shares of Paytm settled 24 points or 4 per cent down at Rs 530.05 on the BSE after hitting an intraday low of Rs 505.25.
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