November 28, 2023

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Ex-director seeks to stall $2-bn Paytm IPO, company calls it harassment

Paytm’s $2.2 billion IPO is dealing with an uncommon hurdle – a 71-12 months-aged previous director has urged India’s marketplaces regulator to stall the providing, alleging he is a co-founder who invested $27,500 two a long time back but by no means obtained shares.

In legal files found by Reuters, Paytm claims the claim by Ashok Kumar Saxena and allegations of fraud in a law enforcement complaint in New Delhi are mischievous makes an attempt to harass the firm. The dispute even though is cited below “prison proceedings” in Paytm’s July IPO prospectus submitted for regulatory approval.

Saxena denied harassment and reported Paytm experienced a superior profile place that intended a personal personal like him was not in a place to harass the corporation.

Saxena has approached the Securities and Trade Board of India (SEBI) to stall the IPO, arguing traders could eliminate funds if his claim is proved right, in accordance to a earlier unreported complaint found by Reuters.

SEBI did not react to a request for comment.

Shriram Subramanian of shareholder advisory firm InGovern reported the tussle could spark regulatory inquiries and complicate or delay the approval of Paytm’s IPO that could worth it at up to $25 billion.

“SEBI will require assurance that it will not effect the corporation and the public shareholders once shown,” Subramanian reported.

Irrespective of what the regulator decides, the dispute could turn out to be a legal headache in advance of the considerably-awaited IPO of Paytm, which counts China’s Alibaba and Japan’s SoftBank among its traders. Neither responded to a request for comment.

At the heart of the dispute is a 1-web page document signed between Saxena and Paytm’s billionaire CEO, Vijay Shekhar Sharma, in 2001. Viewed by Reuters, it claims Saxena was to get a fifty five% equity stake in Paytm’s mother or father, One97 Communications, with Sharma possessing the relaxation.

Paytm declined to comment. Sharma did not react to a request for comment.

Police Submission

Reuters reviewed a June 29 response the corporation gave to the Delhi Police, in which it claims the document was “simply a letter of intent” which “did not materialize into any definitive agreement”.

The “Arrangement In between Shareholders of One97” paper, was also reproduced by Paytm in advance of law enforcement and signed by the two guys, demonstrates Paytm’s law enforcement submission which is not public.

Paytm’s law enforcement submitting denies Saxena was a co-founder.

Paytm’s rise has been phenomenal, with its app a residence identify in India for digital payments. The face of the corporation has been flamboyant CEO Sharma, forty three, whose app rivals those people operate by Google and Walmart.

Paytm’s incorporation files in the governing administration database clearly show Saxena as a director of the corporation between 2000 and 2004. In its law enforcement response, Paytm agrees he was among the to start with administrators of the company’s mother or father and extended the resources to it. But he “slowly appeared to eliminate fascination”, Paytm claims.

All around 2003-2004, Paytm argues it experienced transferred the shares to an Indian firm as it was “informed” that Saxena experienced arrived at a personal knowledge with them. Saxena reported he by no means received any shares and there was no this kind of knowledge.

Requested why he experienced been silent for numerous a long time, he instructed Reuters by phone from the United States that he experienced professional medical challenges in his loved ones and experienced misplaced critical files which he only observed past summer months.

“The shares and funds are 1 matter, but I also want to be identified as the co-founder,” he reported. “It really is a problem of posterity.”

The make any difference has arrived at a New Delhi courtroom, in which Saxena in July urged a choose to press the town law enforcement to sign-up a situation on his complaint. The courtroom order demonstrates law enforcement have been asked to react and the situation will be read on Aug. 23.

A Delhi Police formal reported on Thursday they would make the essential submissions to the courtroom.

(Only the headline and picture of this report might have been reworked by the Business enterprise Typical employees the relaxation of the content is automobile-generated from a syndicated feed.)