Paytm’s $2.2 billion IPO is struggling with an strange hurdle – a seventy one-year-aged previous director has urged India’s markets regulator to stall the offering, alleging he is a co-founder who invested $27,five hundred two a long time ago but never obtained shares.

In authorized files found by Reuters, Paytm states the claim 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 while is cited under “felony proceedings” in Paytm’s July IPO prospectus filed for regulatory acceptance.

Saxena denied harassment and explained Paytm had a significant profile situation that intended a private personal like him was not in a situation to harass the company.

Saxena has approached the Securities and Trade Board of India (SEBI) to stall the IPO, arguing traders could shed money if his claim is proved proper, according to a previously unreported criticism found by Reuters.

SEBI did not answer to a ask for for comment.

Shriram Subramanian of shareholder advisory company InGovern explained the tussle could spark regulatory inquiries and complicate or delay the acceptance of Paytm’s IPO that could price it at up to $twenty five billion.

“SEBI will will need assurance that it will not impression the company and the public shareholders at the time mentioned,” Subramanian explained.

Irrespective of what the regulator decides, the dispute could grow to be a authorized headache forward of the a great deal-awaited IPO of Paytm, which counts China’s Alibaba and Japan’s SoftBank amongst its traders. Neither responded to a ask for for comment.

At the heart of the dispute is a a person-site document signed between Saxena and Paytm’s billionaire CEO, Vijay Shekhar Sharma, in 2001. Found by Reuters, it states Saxena was to get a fifty five% fairness stake in Paytm’s parent, One97 Communications, with Sharma owning the rest.

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

Law enforcement Submission

Reuters reviewed a June 29 reaction the company gave to the Delhi Law enforcement, exactly where it states the document was “merely a letter of intent” which “did not materialize into any definitive arrangement”.

The “Agreement Involving Shareholders of One97” paper, was also reproduced by Paytm just before police and signed by the two gentlemen, exhibits Paytm’s police submission which is not public.

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

Paytm’s increase has been phenomenal, with its app a family title in India for digital payments. The experience of the company has been flamboyant CEO Sharma, 43, whose app rivals people run by Google and Walmart.

Paytm’s incorporation files in the federal government databases show Saxena as a director of the company between 2000 and 2004. In its police reaction, Paytm agrees he was amongst the initially administrators of the firm’s parent and extended the funds to it. But he “step by step appeared to shed desire”, Paytm states.

All over 2003-2004, Paytm argues it had transferred the shares to an Indian company as it was “knowledgeable” that Saxena had reached a private knowledge with them. Saxena explained he never gained any shares and there was no this kind of knowledge.

Asked why he had been silent for several several years, he told Reuters by telephone from the United States that he had health care issues in his family and had misplaced key files which he only discovered past summer season.

“The shares and money are a person thing, but I also want to be acknowledged as the co-founder,” he explained. “It truly is a issue of posterity.”

The subject has reached a New Delhi court docket, exactly where Saxena in July urged a decide to press the town police to sign up a case on his criticism. The court docket get exhibits police have been questioned to answer and the case will be read on Aug. 23.

A Delhi Law enforcement official explained on Thursday they would make the needed submissions to the court docket.

(Only the headline and photograph of this report may perhaps have been reworked by the Enterprise Standard employees the rest of the information is car-produced from a syndicated feed.)