The shares of One97 Communications, which owns the Paytm brand, were down 4.41 per cent on the Bombay Stock Exchange on Monday amid investor concerns over reports of Sebi issuing show cause notices to chairman Vijay Shekhar Sharma and board members who had served during the company’s IPO in November 2021 for the alleged misrepresentation of facts.

On the BSE, the company scrips were at ₹530.05 a piece, down ₹24.45 over the previous close. During the day, it plunged 8.88 per cent to ₹505.25.

The issue pertained to non-compliance with promoter classification norms.

The SBEB (Share Based Employee Benefits) Regulations define employees to include a director of a company, including non-executive directors, who is not a promoter or member of the promoter group.

Sharma would have been likely to be ineligible for employee stock options (Esops) after the listing as Sebi regulations prohibit promoters from receiving Esops post their listing. The probe was reportedly initiated based on inputs from the RBI, which had examined Paytm Payments Bank earlier this year.

In the notes to the consolidated financial results for the quarter ended June 30, 2024, the company had disclosed that during the year ended March 31, 2022, it had granted 2.1 crore Esops to MD and CEO (Sharma) which was subject to the achievement of specified milestones.

“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,” the notes to the result said.

“Based on an independent legal opinion obtained by the management, it believes that the company is compliant with regulations,” the notes said.

Responding to a clarification from the BSE, Paytm said that this is not a new development and that the company has disclosed the same in quarterly financial results for the first quarter of the current fiscal and the fourth quarter of 2023-24.

“The company is in regular communication with Sebi and making necessary representations regarding this matter,” the exchange filing from the company on Monday said.

Paytm shares dropped 4.47 per cent to ₹530 on the NSE. Intra-day, the stock tumbled 8.88 per cent to ₹505.55.

Ahead of its AGM scheduled for next month, Paytm last week proposed reduced remuneration for board members, according to PTI.

The proposed remuneration framework will be subject to shareholder approval.