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

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Paytm’s $2.2 billion IPO is experiencing an strange hurdle – a 71-calendar year-old former director has urged India’s marketplaces regulator to stall the presenting, alleging he is a co-founder who invested $27,five hundred two decades in the past but never received shares.

In authorized documents observed by Reuters, Paytm suggests the declare by Ashok Kumar Saxena and allegations of fraud in a police criticism in New Delhi are mischievous makes an attempt to harass the company. The dispute although is cited less than “legal proceedings” in Paytm’s July IPO prospectus submitted for regulatory approval.

Saxena denied harassment and mentioned Paytm experienced a high profile placement that intended a private particular person like him was not in a placement to harass the organization.

Saxena has approached the Securities and Trade Board of India (SEBI) to stall the IPO, arguing investors could get rid of funds if his declare is proved suitable, according to a formerly unreported criticism observed by Reuters.

SEBI did not answer to a ask for for remark.

Shriram Subramanian of shareholder advisory company InGovern mentioned 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 have to have assurance that it will not affect the organization and the general public shareholders once shown,” Subramanian mentioned.

Irrespective of what the regulator decides, the dispute could turn into a authorized headache forward of the much-awaited IPO of Paytm, which counts China’s Alibaba and Japan’s SoftBank among its investors. Neither responded to a ask for for remark.

At the heart of the dispute is a just one-webpage doc signed amongst Saxena and Paytm’s billionaire CEO, Vijay Shekhar Sharma, in 2001. Noticed by Reuters, it suggests Saxena was to get a fifty five% fairness stake in Paytm’s parent, One97 Communications, with Sharma possessing the rest.

Paytm declined to remark. Sharma did not answer to a ask for for remark.

Police Submission

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

The “Settlement Concerning Shareholders of One97” paper, was also reproduced by Paytm just before police and signed by the two males, shows Paytm’s police submission which is not general public.

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

Paytm’s increase has been phenomenal, with its app a home identify in India for electronic payments. The confront of the organization has been flamboyant CEO Sharma, 43, whose app rivals those operate by Google and Walmart.

Paytm’s incorporation documents in the authorities database clearly show Saxena as a director of the organization amongst 2000 and 2004. In its police reaction, Paytm agrees he was among the very first directors of the firm’s parent and extended the money to it. But he “steadily appeared to get rid of interest”, Paytm suggests.

About 2003-2004, Paytm argues it experienced transferred the shares to an Indian company as it was “knowledgeable” that Saxena experienced reached a private knowing with them. Saxena mentioned he never been given any shares and there was no these kinds of knowing.

Requested why he experienced been silent for quite a few several years, he instructed Reuters by phone from the United States that he experienced clinical difficulties in his family members and experienced misplaced important documents which he only observed final summer months.

“The shares and funds are just one issue, but I also want to be recognized as the co-founder,” he mentioned. “It is a question of posterity.”

The make any difference has reached a New Delhi court docket, where Saxena in July urged a judge to push the city police to register a circumstance on his criticism. The court docket get shows police have been questioned to answer and the circumstance will be read on Aug. 23.

A Delhi Police official mentioned on Thursday they would make the required submissions to the court docket.

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