The Securities and Exchange Board of India (SEBI) has issued a show-case notice to Paytm over stock options granted to founder and CEO Vijay Shekhar Sharma in FY22, according to the stock exchange filing, which came out along with company's Q1FY25 financial report on July 19.
The regulator has questioned whether Paytm followed the rules regarding 21,000,000 Employee Stock Options (ESOP) granted to its Managing Director and CEO, which are tied to specific goals.
"During the previous quarter, the company had received a Show Cause Notice from SEBI related to the above options regarding compliance with SEBI SBEB Regulations. The Company had submitted its preliminary response and is in the process of seeking further information from SEBI in this regard," per the company filings.
Paytm said it has obtained a legal opinion suggesting it followed the rules correctly and there is no effect on its financial results for the quarter ending June 30, 2024, or the previous quarter ending March 31, 2024.
"The company is confident that its financial performance remains stable despite the regulatory review," it added.
On July 16, One 97 Communications, the parent company of Paytm, had received an administrative warning letter from SEBI over a related party transactions entered by the company with Paytm Payments Bank for FY22, which the regulator said did not have the approval of either the audit committee or the shareholders.
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