NCLT Orders Status Quo On Shareholding Of Aakash

SUMMARY

The NCLT has ordered a status quo on the shareholding of the edtech till the next hearing on April 30

The move effectively pauses the company's bid to amend its articles of association (AoA) for at least a month

The equity fundraise for Aakash, which might see BYJU'S founder Byju Raveendran offload more stake in the company, has seen a severe opposition from investors of Aakash and BYJU’S over the past few months

Extending the months-long turmoil over Aakash Institute’s fundraise plans, the National Company Law Tribunal (NCLT) has ordered a status quo on the shareholding of the edtech till the next hearing on April 30.

The direction was issued by the NCLT’s Bengaluru bench in response to a plea filed by the resolution professional of BYJU’S, Bar and Bench reported.

The report cited judicial member Sunil Kumar and technical member Radhakrishna Sreepada saying that the status quo has been ordered to “avoid the issues between the parties” to further complicate the matter.

The move effectively pauses the company’s bid to amend its articles of association (AoA) for at least a month. Aakash is looking to alter its AoA to raise fresh capital.

Earlier, Aakash told the NCLT during a hearing that amendments to its AoA are critical for its sustenance. It said that the fundraise is quintessential for it to “survive and sustain its business”. It cited the need to cover operational costs for its large network of physical classrooms, teachers and students.

While there has been no official clarity on the amount the coaching center chain might be raising, its CEO and MD Deepak Mehrotra told the Financial Express on January 29 that the company would be eyeing a fundraise of INR 500 Cr.

While the MD told the publication that discussions were at an early stage, Aakash’s fundraise plans have been stuck in a legal limbo for about six months now.

The equity fundraise, which might see embattled startup BYJU’S founder Byju Raveendran offload more stake in the company, has been opposed by the investors of Aakash and BYJU’S.

The first mover in the legal case pertaining to Aakash’s AoA amendment was its investor Singapore Topco. After filing a plea challenging the process due to the potential dilution of its stake in the company, Singapore Topco withdrew its challenge earlier last month.

Meanwhile, Glas Trust, which is a consortium of BYJU’S US-based lenders, continues to contend against the changes in AoA. Recently, Aakash founder Jagdish Chand Chaudhary also opposed the move.

Earlier this month, Chaudhary filed a plea to restrain the company from making alterations to the AoA. His petition is also due for a hearing on April 30.