INSUBCONTINENT EXCLUSIVE:
Paytm says claim by Ashok Kumar Saxena and allegations of fraud are mischievous.Paytm's $2.2 billion IPO is facing an unusual hurdle - a
71-year-old former director has urged markets regulator to stall the offering, alleging he is a co-founder who invested $27,500 two decades
ago but never got shares.In legal documents seen by Reuters, Paytm says the claim by Ashok Kumar Saxena and allegations of fraud in a police
complaint in New Delhi are mischievous attempts to harass the firm
The dispute though is cited under "criminal proceedings" in Paytm's July IPO prospectus filed for regulatory approval.Mr Saxena denied
harassment and said Paytm had a high profile position that meant a private individual like him was not in a position to harass the
company.Mr Saxena has approached the Securities and Exchange Board of India (SEBI) to stall the IPO, arguing investors could lose money if
his claim is proved right, according to a previously unreported complaint seen by Reuters.SEBI did not respond to a request for
comment.Shriram Subramanian of shareholder advisory firm InGovern said 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 need assurance that it will not impact the company and the
public shareholders once listed," Mr Subramanian said.Irrespective of what the regulator decides, the dispute could become a legal headache
ahead of the much-awaited IPO of Paytm, which counts China's Alibaba and Japan's SoftBank among its investors
Neither responded to a request for comment.At the heart of the dispute is a one-page document signed between Mr Saxena and Paytm's
billionaire CEO, Vijay Shekhar Sharma, in 2001
Seen by Reuters, it says Mr Saxena was to get a 55 per cent equity stake in Paytm's parent, One97 Communications, with Mr Sharma owning the
rest.Paytm declined to comment
Mr Sharma did not respond to a request for comment.Police SubmissionReuters reviewed a June 29 response the company gave to the Delhi
Police, where it says the document was "merely a letter of intent" which "did not materialize into any definitive agreement".The "Agreement
Between Shareholders of One97" paper, was also reproduced by Paytm before police and signed by the two men, shows Paytm's police submission
which is not public.Paytm's police filing denies Mr Saxena was a co-founder.Paytm's rise has been phenomenal, with its app a household name
in India for digital payments
The face of the company has been flamboyant CEO Mr Sharma, 43, whose app rivals those run by Google and Walmart.Paytm's incorporation
documents in the government database show Mr Saxena as a director of the company between 2000 and 2004
In its police response, Paytm agrees he was among the first directors of the company's parent and extended the funds to it
But he "gradually seemed to lose interest", Paytm says.Around 2003-2004, Paytm argues it had transferred the shares to an Indian firm as it
was "informed" that Mr Saxena had reached a private understanding with them
Mr Saxena said he never received any shares and there was no such understanding.Asked why he had been silent for several years, he told
Reuters by telephone from the United States that he had medical issues in his family and had misplaced key documents which he only found
last summer."The shares and money are one thing, but I also want to be recognized as the co-founder," he said
"It's a question of posterity."The matter has reached a New Delhi court, where Mr Saxena in July urged a judge to press the city police to
register a case on his complaint
The court order shows police have been asked to respond and the case will be heard on August 23.A Delhi Police official said on Thursday
they would make the necessary submissions to the court.
