NCLT Refuses To Stall BYJU’s EGM On $200 Mn Rights Issue

In a breather for embattled BYJU’S, the National Company Law Tribunal (NCLT) on Wednesday (March 28) refused to stay the edtech giant’s extraordinary general meeting (EGM) on March 29 pertaining to its $200 Mn rights issue.

BYJU’S has called the EGM to increase its authorised share capital following its $200 Mn rights issue.

However, four of the company’s investors – Prosus, General Atlantic Singapore, Peak XV Partners, and Sofina – approached the Bengaluru bench of the NCLT seeking a stay on the EGM due to alleged oppression and mismanagement by BYJU’S.

During today’s hearing, the petitioners argued that various applications are pending pertaining to the rights issue and the edtech company is trying to bypass them, Bar and Bench reported.

However, the Tribunal said that any decision taken at the EGM could be challenged. “EGM cannot be stayed, there are decisions. But the decision of the EGM can be challenged,” the bench said. 

The NCLT bench comprised judicial member K Biswal and technical member Manoj Kumar Dubey. 

It is pertinent to note that BYJU’S is at war with its investors and both the parties are involved in multiple legal cases.

The latest development came a month after BYJU’S closed its $200 Mn rights issue, at a valuation cut of 99%. However, aggrieved investors moved NCLT, Karnataka High Court, and even Supreme Court against this move. The edtech giant has been asked to keep the proceeds from the rights issue in a separate escrow account.

Meanwhile, BYJU’S investors held an EGM last month during which seven resolutions were passed, including those calling for restructuring the edtech startup’s board and removal of its founder Byju Raveendran from the role of CEO, along with those of his family members Divya Gokulnath and Riju Raveendran from their respective management roles and as directors. 

However, the Karnataka High Court stayed the implementation of the resolutions passed during the EGM till the next hearing on March 28. The HC’s hearing in the matter today was postponed by two months.

Note: We at Inc42 take our ethics very seriously. More information about it can be found here.