India's markets regulator has issued show-cause notices to Paytm founder Vijay Shekhar Sharma and other board members who held roles during the firm's November 2021 IPO over alleged misrepresentation of facts, Moneycontrol reported on Monday.
The issue revolves around whether Sharma should have been classified as a large shareholder who can influence company decision, rather than an employee, when Paytm filed its IPO papers, the report said, citing two people aware of the matter.
SEBI has questioned directors at the time for backing Sharma's view of not being a large shareholder, the report said.
Sharma is classified as a public shareholder, not a large shareholder, according to exchange data, which also says Paytm has no investors categorised as "large shareholders."
"The company is in regular communication with the SEBI and making necessary representations regarding this matter," Paytm said, adding it has already disclosed the notice in its quarterly earnings filing.
According to company disclosures, SEBI alleged that grant of 21 million employee stock options (ESOPs) to Sharma were in violation of its rules on grant of shares-based employee benefits.
