Vijay Shekhar Sharma, the founder of One 97 Communications Ltd., the parent company of Paytm and board members who were present during the company’s initial public offering in November 2021 have received show-cause notices from the Securities and Exchange Board of India (Sebi) for allegedly misrepresenting facts, two people with direct knowledge of the matter, as per Money control.
The notices are related to Sharma’s alleged noncompliance with promoter classification norms. According to the people cited above, the investigation was launched based on information provided by the Reserve Bank of India (RBI), which examined Paytm Payments Bank early this year.
The central question is whether Sharma should have been classified as a promoter instead of an employee while filing the IPO documents. As a result, Sebi issued show-cause notices to the company’s directors at the time, questioning them about their support for Sharma’s stance, the people said.
According to the people cited above, Sharma would not have been eligible for employee stock options (ESOPs) following the listing since Sebi regulations prohibit promoters from getting ESOPs after the IPO.
