According to three people with knowledge of the developments and filings examined, the Securities and Exchange Board of India (Sebi) has increased its scrutiny on promoter classification of companies looking to go public. As a result of the markets regulator’s observations, at least six companies in the past three months have added individuals or entities as promoters.
Recently, there were inquiries concerns about the founders of failing startups maintaining control of the businesses despite declaring themselves as public shareholders were brought up by securities attorneys and proxy consulting services.
After Paytm, the issue of founders enjoying the benefits of being a promoter without being recognised as one came to light.
Vijay Shekhar Sharma, the company’s founder and CEO, made the decision to buy an additional 10.3% of the business from Ant Group.
Sharma is a non-retiring director on the board of One97 Communications Ltd, the company that owns Paytm, and the chairman of the business. He is eligible for a board position as long as he owns at least 2.5% of the business, which securities attorneys feel gives him influence over the enterprise. But Sharma does not identify as a Paytm promoter.
Similar circumstances were identified at a Mumbai-based Valiant Laboratories, a producer of pharmaceutical ingredients.Santosh Vora, the company’s managing director, was not included in the promoter even though the draught red herring prospectus (DRHP) filed listed his father, Shantilal, as the promoter by Sebi on June 8.
Valiant submitted an amendment to the initial public offering (IPO) paper on August 14.
