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

Paytm’s $2.2 billion IPO is going through an unusual hurdle – a 71-calendar year-outdated previous director has urged India’s marketplaces regulator to stall the supplying, alleging he is a co-founder who invested $27,five hundred two many years back but hardly ever received shares.

In legal paperwork viewed by Reuters, Paytm states the declare by Ashok Kumar Saxena and allegations of fraud in a law enforcement complaint in New Delhi are mischievous attempts to harass the firm. The dispute while is cited under “legal proceedings” in Paytm’s July IPO prospectus submitted for regulatory approval.

Saxena denied harassment and claimed Paytm experienced a substantial profile place that meant a private person like him was not in a place to harass the business.

Saxena has approached the Securities and Trade Board of India (SEBI) to stall the IPO, arguing traders could drop cash if his declare is proved ideal, in accordance to a earlier unreported complaint viewed by Reuters.

SEBI did not respond to a request for comment.

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

“SEBI will will need assurance that it will not affect the business and the general public shareholders once mentioned,” Subramanian claimed.

Irrespective of what the regulator decides, the dispute could come to be a legal headache ahead of the much-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 just one-site doc signed involving Saxena and Paytm’s billionaire CEO, Vijay Shekhar Sharma, in 2001. Found by Reuters, it states Saxena was to get a 55{79e59ee6e2f5cf570628ed7ac4055bef3419265de010b59461d891d43fac5627} fairness stake in Paytm’s parent, One97 Communications, with Sharma possessing the relaxation.

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

Police Submission

Reuters reviewed a June 29 reaction the business gave to the Delhi Police, where by it states the doc was “basically a letter of intent” which “did not materialize into any definitive arrangement”.

The “Arrangement Concerning Shareholders of One97” paper, was also reproduced by Paytm before law enforcement and signed by the two adult males, demonstrates Paytm’s law enforcement submission which is not general public.

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

Paytm’s increase has been phenomenal, with its app a domestic name in India for digital payments. The face of the business has been flamboyant CEO Sharma, forty three, whose app rivals those people run by Google and Walmart.

Paytm’s incorporation paperwork in the authorities database demonstrate Saxena as a director of the business involving 2000 and 2004. In its law enforcement reaction, Paytm agrees he was among the very first directors of the company’s parent and prolonged the cash to it. But he “step by step appeared to drop curiosity”, Paytm states.

All over 2003-2004, Paytm argues it experienced transferred the shares to an Indian firm as it was “educated” that Saxena experienced arrived at a private being familiar with with them. Saxena claimed he hardly ever received any shares and there was no these being familiar with.

Requested why he experienced been silent for quite a few decades, he instructed Reuters by phone from the United States that he experienced healthcare challenges in his household and experienced misplaced critical paperwork which he only identified previous summer season.

“The shares and cash are just one factor, but I also want to be regarded as the co-founder,” he claimed. “It really is a dilemma of posterity.”

The matter has arrived at a New Delhi courtroom, where by Saxena in July urged a decide to push the city law enforcement to sign-up a situation on his complaint. The courtroom order demonstrates law enforcement have been asked to respond and the situation will be read on Aug. 23.

A Delhi Police official claimed on Thursday they would make the vital submissions to the courtroom.

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