Paytm Clarifies: Not New SEBI Notice, Already Disclosed In Its Annual Financial Results

One97 Communications, the parent company of fintech giant brand Paytm, has clarified reports of Sebi show-cause notice to their chief Vijay Shekhar Sharma and its directors. Over the buzz, Paytm has clarified saying, no new Sebi notice since it has already relevant disclosures related to the matter in its annual financial results.

Paytm said, "One97 Communications, the parent entity that operates the brand Paytm, stated on Monday as part of its stock exchange filing that it had made relevant disclosures relating to SEBI's notice, in its financial results for the quarter and year ended March 31, 2024, as well as the quarter ended June 30, 2024."

The response comes after stock exchanges 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 report stated that the market watchdog 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.

GoodReturns.In had also contacted Paytm over the matter.

In its clarification note, Paytm revealed that the "company received the notice during the quarter ending March 2024, and has already addressed the matter through making a preliminary response."

It added that "Paytm is currently in the process of seeking further information from SEBI regarding this matter. Based on an independent legal opinion obtained by management, the company believes it is compliant with the relevant regulations, its auditor's review report stated."

As per the financial results document during the quarter ending June 2024 and March 2024 period, Paytm revealed that it was at the March 2022 year-end, when the company granted 21,000,000 Employee Stock Options to the Managing Director and CEO of the Company which is subject to achievement of specified milestones. During the current quarter, the Company has received a Show Cause Notice ("SCN") from SEBI related to the above options regarding compliance with SEBI SBEB Regulations.

Paytm already disclosed in the document that it has submitted its preliminary response and is in the process of seeking further information from SEBI in this regard.

"Based on an independent legal opinion obtained by the management, it believes that the Company is compliant with the relevant regulations," the disclosure said.

Accordingly, Paytm clarifiTherethere is no impact on the financial results for the current or previous quarters ended June 30, 2024, and March 31, 2024."

Furthermore, Paytm added that it is in regular communication with themarkets regulator on the matter.

It said, "The Company (Paytm) 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. "

Also, Paytm said, "The company's proactive approach in addressing the notice, seeking further information and relevant disclosures as part of its auditor's review report reflects its commitment to adhering to regulatory standards and ensuring transparency in its operations."

However, the buzz resulted in panic selling in Paytm shares so much so that it fell by nearly 9% to hit an intraday low of Rs 505.25 apiece. After market hours, Paytm shares ended at Rs 530.05 apiece, down by 4.41% with a market cap of Rs 33,731.56 crore.