High Court comes to the rescue of Paytm

High Court comes to the rescue of Paytm

Fintech's former director seeks stay on its IPO

The Delhi High Court has refused to halt Paytm's Initial Public Offer (IPO) after its former director Ashok Kumar Saxena moved the court seeking a stay on it.

The IPO is scheduled for November 8.

Saxena, who served as the director of India's largest mobile payments and commerce platform, cited a "serious shareholding" dispute, with Paytm and its founder Vijay Shekhar Sharma. From 2001-2004, he was on the board of Paytm's parent company, One97 Communications.

In his petition, Saxena claimed that he was entitled to 55 percent of Paytm's equity shares. The former director based his claim on the investment of Rs.13 lakhs in Paytm in 2000. He argued that he had red-flagged the shareholding dispute to not just the market regulator Securities & Exchange Board of India (SEBI), but had also lodged a complaint with the Delhi Police.

He argued that SEBI's listing norms required the disclosure of the ongoing "shareholder dispute." While seeking a stay on the IPO, he contended that sufficient disclosure had not been made.

Meanwhile, SEBI submitted that it had advised Paytm to make a few amendments to the disclosures to comply with the norms. It added that Paytm had agreed and implemented the amendments advised by the market regulator. Therefore, with the revised disclosures, Paytm's offer documents were in compliance with the listing norms.

Though declining to grant the interim relief of a stay on Paytm's IPO, the court, however, agreed to hear the former director's plea and issued a notice to Paytm, its founder and SEBI.