The owners of the online payments company Paytm, One 97 Communications Ltd, saw their shares rise more than 3% on Tuesday, August 27, to an intraday high of ₹548 a share on the NSE. This came after the company clarified some media reports about show-cause notices issued by the Securities Exchange Board of India (SEBI).
In response to media reports claiming that the market regulator had sent show-cause notices to Paytm founder and CEO Vijay Shekhar Sharma and other board members in November 2021 at the time of Paytm’s initial public offering (IPO), Paytm clarified its position in a stock exchange filing on August 26. The papers state that the show-cause notices were sent out due to non-compliance with promoter classification criteria.
Nonetheless, Paytm made it clear that the SEBI action is “not a new development.” According to the fintech company, it has previously disclosed pertinent information about the issue in its financial reports for the March quarter of FY24 and the June quarter of FY25.
“Concerning recent media reports, we would like to inform you that 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 is in regular communication with the Securities Exchange Board of India (SEBI) and making necessary representations regarding this matter,” Paytm said.
Additionally, the business stated that the notice did not affect the financial outcomes of the quarters that ended on March 31, 2024, and June 30, 2024, respectively.
The investigation was reportedly started in response to recommendations from the Reserve Bank of India (RBI), which had looked into Paytm Payments Bank earlier this year. Considering that Sharma possessed managerial control at the time the IPO paperwork was filed, his designation as a promoter is being questioned. The directors of the company were also served with show-cause notices by the SEBI at that time for supporting Sharma’s position.
At 10:15 am on the NSE, Paytm shares are up 1.64% to ₹539 a share.
