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Paytm's Vijay Shekhar Sharma faces Sebi show-cause notice over IPO breaches: Report
Sebi issued show-cause notices to Paytm's Vijay Shekhar Sharma and board members over alleged IPO misrepresentation in 2021.
The Securities and Exchange Board of India (Sebi) issued show-cause notices to Vijay Shekhar Sharma, founder of One 97 Communications Ltd (Paytm parent company), and board members who served during its initial public offering in November 2021 for alleged misrepresentation of facts, it was reported. The notices pertain to Vijay Shekhar Sharma’s alleged non-compliance with promoter classification norms. The Reserve Bank of India gave inputs for the probe, the report added.
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One person in the know told the outlet, “Sebi is taking the view that Sharma should have been classified as a promoter, and it was also the fiduciary duty of board members of the company to verify the accuracy of the claims made by the founder and attest the same."
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The source added, “Although Sebi has gone after directors of a company in the past, they have been mostly cases of financial fraud. This is one of the rare cases where Sebi is trying to hold the directors responsible for a potential compliance lapse, which was also not pointed out either by bankers or statutory auditors.”
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Another person in the know said as per the report, “A key issue in the case is that Sebi has initiated action three years after the listing. Sebi had known about the shareholding arrangement ever since the offer document was filed in 2021. In fact, subsequently, proxy advisory firms have also red-flagged the issue. However, Sebi initiated action only after the Paytm Payments Bank saga."
