The Securities and Exchange Board of India (SEBI) has issued show-cause notices to Vijay Shekhar Sharma, founder of One97 Communications (Paytm), and board members involved during the company's November 2021 IPO for alleged misrepresentation of facts and non-compliance with shareholder classification norms. The notices question whether Sharma should have been classified as a large shareholder rather than an employee, which would have disqualified him from receiving stock options under existing regulations. Paytm's stock price dropped nearly 9% following the news but recovered slightly to close down 4.4%. The company stated that these notices are not new and had already been disclosed in previous financial reports. Paytm is actively communicating with SEBI and believes it is compliant based on independent legal opinions. The issue also ties to broader regulatory concerns about founders and family members of tech startups owning shares under employee stock ownership plans.