A show-cause notice has been issued against Paytm by the capital markets regulating body Securities and Exchange Board of India (SEBI).
The notice is regarding the fintech platform’s grant of 2.1 crore Employee Stock Options (ESOPs) to its founder and CEO Vijay Shekhar Sharma in the financial year ended March 2022. These stock options were associated with a milestone of the company.
The fintech major’s exchange filing on Friday stated, “During the previous quarter (Q4 FY24), the company had received a show cause notice from SEBI related to the above options regarding compliance with SEBI SBEB Regulations. The company has submitted its preliminary response and is in the process of seeking further information from SEBI in this regard.”
Paytm has updated that the notice has not impacted its financial results for the March (Q4 FY24) and June (Q1 FY25) quarter.
SEBI had recently issued an administrative warning to the fintech for related-party transactions. The Noida-based company along with its subsidiaries allegedly processed two transactions without the audit committee or shareholders’ approval. One 97 Communications, the fintech’s parent company, took services from Paytm Payments Bank in FY22 for which the estimated amounts were Rs 324 crore and Rs 36 core respectively.
But Paytm claimed that it consistently acted in compliance. “The company is committed to upholding and demonstrating the highest compliance standards and shall also submit its response to SEBI. There is no impact on financial, operation or other activities of the company pursuant to the above mentioned letter,” the firm responded.
As for the Q1 FY25 results, its net loss jumped by 134% YoY to Rs 840.1 crore from Rs 358.4 crore while its revenue from operations dropped by 36% from Rs 2,342 crore to Rs 1,502 core in the same period. Paytm’s total expenses decreased by 11.5% YoY from Rs 2,800 crore to Rs 2,476.4 crore. On Friday, the fintech’s shares closed at Rs 458.7 per unit on the Bombay Stock Exchange (BSE).
