SUMMARY
The investors have raised concerns about BYJU’s loss of control over Aakash, a $1.2 Bn term loan default, failure to hire a CFO
The suit seeks to declare the founders unfit to run the company, appoint a new board, declare the rights issue as void, and pursue other reliefs
It comes when the extraordinary general meeting (EGM) called by BYJU’s shareholders on Friday has concluded
A group of four investors in BYJU’S on Friday (February 23) moved the Bengaluru Bench of the National Company Law Tribunal (NCLT) filing a petition for oppression and mismanagement of the company.
The petition has been signed by four investors, Prosus, GA, Sofina and Peak XV, according to sources who spoke to Inc42. Besides this Tiger Global and Owl Ventures are also in support of initiating NCLT proceedings against the edtech giant.
The NCLT petition seeks to declare founders — CEO Byju Raveendran and cofounder Divya Gokulnath — unfit to run the company, and is also seeking the appointment of a new board. Besides this, the group of investors wants to declare the ongoing rights issue as void and pursue other reliefs to infuse funds in the company.
The investors have raised concerns about BYJU’S loss of control over subsidiaries such as Aakash, a $1.2 Bn Term Loan B default, the failure to hire a CFO and independent director, and deliberate default in sharing information with shareholders, among others. These were also some of the major discussion points in the company’s extraordinary general meeting held on Friday morning (February 23).
Furthermore, the investors are seeking various remedies in the suit against the current management of the company. These include declaring the present management as unfit to run the company and calling for the appointment of a new CEO and board.
Additionally, they are also seeking direction from management to share information with investors and conduct a forensic audit of the company. The investors also seek to declare the rights offer as void and direct the company to refrain from taking any corporate actions that may prejudice the rights of the investors.
While the EGM called for by the shareholders has concluded, the voting results are only expected later in the day.
As reported by Inc42, the EGM wanted to address the proposed ousting of founder and CEO Byju Raveendran as well as other points of failure by the company in the view of the shareholders. Shareholders who initiated this EGM include Prosus, General Atlantic, Peak XV, Sofina, Chan Zuckerberg Initiative, Owl Ventures, and Sand Capital Management.
CEO Raveendran, Gokulnath as well as board member Riju Ravindran declined to attend the EGM, terming it as ‘invalid.’
Earlier, reports indicated that the Directorate of Enforcement (ED) had urged the Bureau of Immigration (BOI) to issue a look out circular (LOC) against the edtech major’s cofounder and CEO.
The company has been in various controversies over the past few years, including mass layoffs, regulatory scrutiny, a looming debt crisis, and a cash crunch. Additionally, it has drawn the ire of investors for delays in filing financial statements and its decision to pursue a $200 Mn rights issue at a valuation cut of approximately 99%.
