One 97 Communications Ltd., the parent company of the Paytm brand, said that the reports on the company receiving a Securities and Exchange Board of India (SEBI) show cause notice is not a new development. The company has made the relevant disclosures on the matter in its financial statements for the year ended March 31, 2024, and the quarter ended June 2024, according to the company's Bombay Stock Exchange (BSE) filing on Monday, August 26.
“With reference to recent media reports, we would like to inform you that this is not a new development, as the Company had already made relevant disclosures on this matter in its financial results for the quarter and year ended March 31, 2024, as well as the quarter ended June 30, 2024,” said the company in the exchange filing.
“The Company is in regular communication with the Securities Exchange Board of India (SEBI) and making necessary representations regarding this matter. Accordingly, there is no impact on the financial results for previous quarters ended June 30, 2024, and March 31, 2024, respectively,” said Paytm in the filing.
Paytm also stated that based on an independent legal opinion obtained by management, the company believes it is compliant with the relevant regulations. The brand is trying to seek more information about this matter from SEBI, according to the company's auditor review report.
“We are committed to taking all necessary steps to ensure continued adherence to regulatory requirements and remain dedicated to transparency and compliance in all our actions,” said Paytm in the filing.
Moneycontrol reported on Monday that SEBI issued a show cause notice to Chief Executive Officer (CEO) Vijay Shekhar Sharma and Paytm board members who served during the company's initial public offering (IPO) in November 2021 for alleged misinterpretation of facts.
The report quoted that the SEBI's show cause notice alleged non-compliance with promoter classification norms.
“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,” reported the news platform quoting anonymous sources.
“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,” they said, quoted the report.
One 97 Communications Ltd., shares fell nearly 9 per cent on Monday's intraday trading session as the report about the capital market regulator issuing a show cause notice on Paytm came out. The company's shares dropped 8.8 per cent to ₹505.25 per share after the news reports came out.
One 97 Communications shares closed 4.41 per cent lower at ₹530.05 after Monday's market close, compared to ₹554.50 in the previous market session.
