India’s markets regulator has issued show-cause notices to Paytm founder Vijay Shekhar Sharma and different board members who held roles through the agency’s November 2021 IPO over alleged misrepresentation of information, Moneycontrol reported on Monday.
The problem revolves round whether or not Sharma ought to have been categorized as a big shareholder who can affect firm choice, quite than an worker, when Paytm filed its IPO papers, the report mentioned, citing two folks conscious of the matter.
SEBI has questioned administrators on the time for backing Sharma’s view of not being a big shareholder, the report mentioned.
Sharma is assessed as a public shareholder, not a big shareholder, in line with alternate knowledge, which additionally says Paytm has no buyers categorised as “giant shareholders.”
“The corporate is in common communication with the SEBI and making mandatory representations concerning this matter,” Paytm mentioned, including it has already disclosed the discover in its quarterly earnings submitting.
In accordance with firm disclosures, SEBI alleged that grant of 21 million worker inventory choices (ESOPs) to Sharma had been in violation of its guidelines on grant of shares-based worker advantages.
As per Indian guidelines, giant shareholders with means to affect firm choices can’t maintain ESOPs.
The SEBI didn’t reply to Reuters requests for remark.
Paytm shares fell as a lot as 8.9 % after the report. They pared some losses to shut down 4.4 %.
SEBI was planning to alter its guidelines to handle issues round founders and members of the family of tech or app-based startups proudly owning shares underneath the worker inventory possession plan, Reuters reported in March 2023.
This alleged non-compliance allowed Sharma to obtain Paytm shares by ESOPs, Reuters reported. SEBI just isn’t in favour of founders proudly owning inventory choices if they’ve rights much like large shareholders, additionally referred to as promoters.
Sharma owned a 14.7 % stake in Paytm a 12 months earlier than submitting to go public in 2021 however lowered his shareholding to 9.1 % by transferring 30.97 million shares to Axis Trustee Companies, performing on behalf of the Sharma household belief in 2021, making him eligible to obtain shares underneath ESOP.
A shareholder with greater than a ten % stake in any publicly listed firm just isn’t eligible to obtain inventory choices.
© Thomson Reuters 2024
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