Paytm Stock Falls 9% On Report Of Sebi Notice To Vijay Shekhar Sharma, Directors; BSE, NSE Seek Clarification

Fintech giant, One97 Communications aka Paytm, nosedived by nearly 9% on BSE and NSE during the trading session of August 26, after a report claimed that Sebi had issued show-cause notices to its chief Vijay Shekhar Sharma and some directors of the company. BSE and NSE have sought clarification from Paytm on the same.

Paytm share price touched the intraday low of Rs 505.25 apiece, nosediving by at least 8.88% in the trade.

Currently, the stock is at Rs 531.25 apiece, down by 4.2% on BSE with a market cap of Rs 33,734.74 crore.

BSE and NSE have sought clarification from Paytm, concerning news appearing in MoneyControl dated August 26, 2024, quoting "Vijay Shekhar Sharma, Paytm directors face Sebi show-cause notices over IPO breaches". The reply is awaited.

GoodReturns.In have also contacted Paytm, and the response is awaited.

MoneyControl cited two people with direct knowledge of the matter, who revealed that Sebi has issued show-cause notices to Vijay Shekhar Sharma, founder of One 97 Communications Ltd (Paytm's parent), and board members who served during its initial public offering in November 2021 for alleged misrepresentation of facts.

The sources stated that the notices were due to Sharma's alleged non-compliance with promoter classification norms.

Sebi's notice is reportedly after questions arose on whether Sharma should have been part of the promoter group since his involvement is more in the management control than as an employee during the filing of IPO draft.

Other Paytm directors are being questioned over their support of Sharma's position in the company.

With Sharma alleged to non-comply with promoter classification guidelines, he is said to be ineligible for employee stock options (ESOPs) which is a benefit that comes after listing. As per the guidelines of Sebi, promoters are not eligible for ESOPs.

Vijay Shekhar Sharma launched the Paytm IPO between November 8, 2021, to November 10, 2021. The Rs 18,300 crore IPO was fully subscribed by 1.89 times. Paytm debuted on November 18, 2021, on the stock exchanges BSE and NSE.

Also, the show-cause notices buzz comes a few days after Paytm entered into definitive agreements for the sale of its entertainment ticketing business which includes movies, sports and events (live performances) ticketing to Zomato Limited. This deal, valued at Rs 2,048 crores on a cash-free, debt-free basis, stands as a testament to the value Paytm has created through its entertainment ticketing business, bringing choice and convenience to millions of Indians with its services and scale.

As part of this agreement, OCL will transfer its entertainment ticketing business to Zomato by 1) Transfer of OCL's entertainment ticketing business to it's 100% subsidiaries, Orbgen Technologies Pvt Limited (OTPL) and Wasteland Entertainment Pvt Ltd (WEPL), and 2) Selling 100% stake in its subsidiaries OTPL and WEPL, which operate the TicketNew and Insider platforms, respectively to Zomato. The transfer will also include ~280 existing employees from the entertainment ticketing business.

The transaction value is subject to cash and net working capital adjustments at closing. Transaction closure is subject to satisfaction of agreed conditions precedent.