SUMMARY
The NCLT, in an interim order, asked BYJU’S to consider the extension of the closure date of the right issue so that the rights of the petitioners do not get prejudiced
BYJU’S ongoing $200 Mn rights issue, at a valuation cut of 99%, ends today
The order came in response to a petition filed by a group of four investors of BYJU’S against the edtech giant and other promoters
The Bengaluru bench of the National Company Law Tribunal (NCLT) has asked embattled BYJU’S to keep the proceeds from its rights issue in a separate escrow account and consider extension of the closure of the rights issue.
BYJU’S ongoing $200 Mn rights issue, at a valuation cut of 99%, ends today (February 28).
In its interim order, the Tribunal asked BYJU’S to consider the extension of the closure date of the right issue “so that the rights of the Petitioners with regard to the making of application for shares under their rights entitlement does not get prejudiced”.
The NCLT also asked the Ministry of Corporate Affairs (MCA), the Securities and Exchange Board of India (SEBI), the Reserve Bank of India (RBI) to submit their replies in the matter in two weeks. The next hearing in the case is scheduled on April 4.
The order came in response to a petition filed by a group of four investors of BYJU’S, including Prosus, Peak XV Partners, General Atlantic and Sofina, against the edtech giant and other promoters.
The counsel appearing for BYJU’S argued that there was no reason to file the petition as the matter pertaining to it is already being looked into by the MCA and the Directorate of Enforcement (ED).
Meanwhile, as reported by Inc42, the lawyers for the investors argued that the proposal for approval for the offer letter for rights issue was without the increase of the authorised share capital.
Demanding a stay on the rights issue, they called for holding an extraordinary general meeting (EGM) to decide how the shares would be allotted, for what purpose, and how the money will be used.
Earlier, sources within BYJU’S told Inc42 that it has received a commitment of $300 Mn from other shareholders for the rights issue.
The development comes at a time when the management of BYJU’S is at war with its investors. Prosus NV, Peak XV Partners, General Atlantic, and Sofina SA, who are among the top backers of the edtech giant, are likely to skip the rights issue.
A group of investors recently also held an EGM and passed a total of seven resolutions, including those calling for restructuring the company’s board and removal of founder and CEO Byju Raveendran and his family members – Divya Gokulnath and Riju Raveendran – from the company’s leadership team.
On the other hand, BYJU’S management has claimed that the EGM was “irrelevant”. Raveendran also asserted that “business is as usual at BYJU’s”.
Meanwhile, the ball now lies in Karnataka High Court which has said that any decision taken by the shareholders of BYJU’S in the EGM shall not be given effect to till the next hearing on March 13.
