New Delhi: Paytm’s $ 2.2 billion initial public offering faces an unusual hurdle – a 71-year-old former director has urged the Indian regulatory agency to stop the offer, claiming he is a co-founder who made $ 27,500 two decades ago. Invested dollars but never got stocks.
In legal documents reviewed by Reuters, Paytm says Ashok Kumar Saxena’s allegation and allegations of fraud in a complaint filed with the New Delhi police force are mischievous attempts to harass the company. However, the dispute is quoted under “criminal proceedings” in the July IPO prospectus of Paytm, which was submitted for regulatory approval.
Saxena denied the harassment, saying that Paytm held a senior position that meant a private individual like him would not be able to harass the company.
Saxena has reached out to the Securities and Exchange Board of India (SEBI) to halt the IPO, arguing that investors could lose money if its claim proves correct, according to a previously unreported complaint from Reuters.
SEBI did not respond to a request for comment.
Shriram Subramanian, of shareholder advisory firm InGovern, said the dispute could spark regulatory investigations and complicate or delay the approval of Paytm’s IPO, valued at up to $ 25 billion.
“SEBI will need assurances that it will not adversely affect the company or public shareholders after its listing,” said Subramanian.
Regardless of the regulator’s decision, the dispute ahead of the highly anticipated IPO of Paytm, whose investors include China’s Alibaba and Japan’s SoftBank, could create a legal headache. Neither of them responded to a request for comment.
At the center of the dispute is a unilateral document signed in 2001 between Saxena and Billionaire CEO of Paytm, Vijay Shekhar Sharma. According to Reuters, Saxena is set to get 55% of the shares in Paytm’s parent company, One97 Communications, while Sharma owns the remainder.
Paytm declined to comment. Sharma did not respond to a request for comment.
FILING THE POLICE
Reuters checked a June 29 response from the company to the Delhi police that said the document was “just a letter of intent” that “did not result in a definitive contract.”
The paper “Agreement Between Shareholders of One97”, which was also reproduced by Paytm in front of the police and signed by the two men, shows Paytm’s police filing, which is not public.
Paytm’s police files deny that Saxena was a co-founder.
The rise of Paytm has been phenomenal, with its app becoming a household name for digital payments in India. The face of the company was the flamboyant CEO Sharma, 43, whose app rivals those of Google and Walmart.
Paytm’s founding documents in the government database show that Saxena was a director of the company between 2000 and 2004. In his police response, Paytm agrees that he was one of the first directors of the company’s parent company and granted it the funds. But he “seemed to be losing interest,” says Paytm.
Paytm argues that it transferred the shares to an Indian company between 2003 and 2004 after it was “informed” that Saxena had entered into a private arrangement with them. Saxena said he never received shares and there was no such understanding.
When asked why he had been silent for several years, he told Reuters by phone from the United States that he had medical problems in his family and that he had misplaced important documents that he had only found last summer.
“The stocks and the money are one thing, but I also want to be recognized as a co-founder,” he said. “It’s a question of posterity.”
The matter reached a court in New Delhi, where in July Saxena called on a judge to urge the city police to register a case on his complaint. The court order shows that the police have been asked for an answer and the case will be heard on August 23.
An official from Delhi Police Department said Thursday that they would provide the necessary documents to the court.
This story was published through a news agency feed with no changes to the text. Only the heading was changed.
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