MCA’s BYJU’S Probe Likely To Focus On Flow And Use Of SPV Funds

At a time when BYJU’S is facing legal action from its US lenders, the Ministry of Corporate Affairs will likely probe the flow and use of funds in a special purpose vehicle (SPV) called BYJU’S Alpha, the US unit of the embattled Indian edtech startup.

As per Moneycontrol’s report, citing a government official, the decision by the MCA follows after the Registrar of Companies (ROC), Bengaluru, recently submitted its report on BYJU’S. 

“The ROC report on BYJU’S has led to further investigation. Investigation will focus on BYJU’S SPV, its money usage, and flow of funds. It’s at an advanced stage,” Moneycontrol reported. 

The ROC, which operates under MCA, has completed an initial probe into BYJU’S, following which the need for an advanced investigation was felt, considering the emergence of financial irregularities in the company.

On June 26, the ministry refuted reports that it cleared the struggling online-education startup of financial fraud. It said no conclusion had been reached in the matter.

In November 2021, BYJU’S secured a loan from some US-based lenders, for which BYJU’S Alpha was incorporated in Delaware for managing the funds.

Think & Learn, which operates BYJU’S, has been fighting the US lenders in courts in Delaware and New York over a $1.2 Bn it owes them.

BYJU’S came under the MCA scrutiny in July last year over alleged governance lapses and compliance issues under the Companies Act, 2013.

This development follows recent events where BYJU’S settled its dispute with the Board of Control for Cricket in India (BCCI). On August 2, the National Company Law Appellate Tribunal (NCLAT) dismissed the insolvency proceedings against the company and approved the settlement with BCCI.

BYJU’S, once the poster child of the Indian startup ecosystem, is battling multiple issues, including mass layoffs, a severe cash crunch, delay in filing financial statements, a slew of legal cases and mounting regulatory scrutiny.