BYJU’S shareholders call for leadership change, pass resolutions at EGM; co calls them invalid

At BYJU'S' extraordinary general meeting (EGM) held on February 23, shareholders present passed all resolutions presented for a vote, including calling for a change in the leadership at the troubled company as well as reconstitution of the Board. However, the edtech company has asserted that the resolutions passed during the EGM are invalid and ineffective.

The BYJU'S family trio—Founder and CEO Byju Raveendran, Co-founder Divya Gokulnath, and his brother Riju Ravindran—all current members of the company’s Board—did not participate in the EGM.

The resolutions include the dismissal of Raveendran from his position as CEO of the company and the removal of both Gokulnath and Ravindran from their current management positions and director roles.

“At today’s EGM, shareholders unanimously passed all resolutions put forward for a vote. These included a request for the resolution of the outstanding governance, financial mismanagement and compliance issues at BYJU’S; the reconstitution of the Board of Directors, so that it is no longer controlled by the founders of T&L; and a change in leadership of the company,” a Prosus spokesperson said in a statement.

The Bengaluru-based edtech company in a statement said, “BYJU’S firmly declares that the resolutions passed during the recently concluded EGM—attended by a small cohort of select shareholders—are invalid and ineffective. The passing of the unenforceable resolutions challenges the rule of law at worst.”

The meeting was convened by investors including General Atlantic, Chan Zuckerberg Initiative, MIH EdTech Investments, Own Ventures, Peak XV Partners, SCI Investments, SCHF PV Mauritius, Sands Capital Global Innovation Fund, Sofina, and T Rowe Price Associates.

“As shareholders and significant investors, we are confident in our position on the validity of the EGM meeting and its decisive outcome, which we will now present to the Karnataka High Court in line with due process,” the Prosus spokesperson noted.

On February 21, the Karnataka High Court issued an interim order stipulating that decisions taken by BYJU’S shareholders during the EGM on February 23 will not be implemented until the next hearing scheduled for March 13, 2024.

“This (court) order, coupled with numerous procedural irregularities and deficiencies, invalidates the resolutions passed by a select, narrow group of shareholders,” BYJU’S noted.

The request for the EGM, sent on February 1, follows earlier notices of requisition sent to the board of directors of Think and Learn Private Limited in July and December 2023, which were disregarded by the company, according to a statement from the group of investors, earlier this month.

Meanwhile, certain investors of BYJU'S have filed a lawsuit at the NCLT’s Bengaluru bench, alleging oppression and mismanagement by the company’s management. They seek the removal of founders, including Raveendran, the appointment of a new board, and the invalidation of the recent rights issue.

The petition was signed by four investors—Prosus, General Atlantic, Sofina, and Peak XV—with support from shareholders, including Tiger Global and Owl Ventures.

The $200-million rights issue, initiated last month at a 99% lower valuation, is likely to serve as crucial financial support for the cash-strapped firm, offering the necessary capital to address immediate liabilities.

BYJU’S, which rapidly grew through strategic acquisitions, continues to encounter challenges post the pandemic-led edtech boom. Most recently, it was reported that the Enforcement Directorate had approached the Bureau of Immigration earlier this month to issue a fresh lookout circular against Raveendran to ensure that he does not leave the country.

(The copy was updated with additional information.)