BYJU’S EGM decisions shall not be given effect pending hearing: Karnataka High Court
The Karnataka High Court has issued an interim order stating that decisions made by BYJU'S shareholders in the February 23 EGM shall not be given effect until the next hearing.
Just over a day before an extraordinary general meeting (EGM) convened by prominent ’ investors, the Karnataka High Court has passed an interim order granting some relief to the edtech firm.
The interim order stated, “The decision, if any taken by the shareholders of the petitioner company in the extraordinary general meeting scheduled on 23.02.2024, shall not be given effect to, till the next date of hearing.” The next listing of this matter is on March 13, 2024, as per the order.
BYJU’S lodged the petition under Section 9 of The Arbitration and Conciliation Act, 1996, contending that several investors, such as 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, had breached the Articles of Association, the Shareholders’ Agreement, and the Companies Act, 2013 by convening an EGM on February 23, 2024, the Bengaluru-based company said in a statement.
Earlier this month, several major investors in BYJU’S issued a notice to Think and Learn Private Limited requesting an EGM to address persistent issues.
In a statement, the group of investors said they are “deeply concerned about the future stability of the company under its current leadership and with the current constitution of the board”.
The present Board comprises BYJU'S Founder and CEO Byju Raveendran, his wife and Co-founder Divya Gokulnath, and his brother Riju Ravindran. Peak XV Partners’ GV Ravishankar, Prosus’s Russell Dreisenstock, and Chan Zuckerberg’s Vivian Wu officially stepped down from the edtech firm’s Board in June last year.
BYJU’S stated in its petition that the alleged grounds for the EGM, such as the dismissal of Raveendran as CEO and Chairman, along with Gokulnath and Ravindran as Directors, were merely a pretext aimed at disrupting the management, control, and functioning of the company.
However, the EGM is allowed to go ahead, with a majority of investors likely to vote in favour of the removal of Raveendran as CEO, as per sources.
The edtech firm said it also contended that the proposed EGM was vexatious and lacked merit, intended solely to disrupt the ongoing rights issue.
Earlier on Wednesday, Raveendran noted that the edtech firm’s $200 million rights issue is fully subscribed and the company will appoint a third-party agency to monitor fund usage.
“Our rights issue is fully subscribed and my gratitude to my shareholders remains strong. But my benchmark of success is the participation of all shareholders in the rights issue,” Raveendran said in a letter to its shareholders, which was seen by YourStory.
The rights issue, at a 99% lower valuation, is a much-needed lifeline for the cash-strapped edtech firm, providing BYJU’S with capital to address pressing liabilities.
Raveendran said he also plans to restructure the board after closing the audit of the financial year 2022-23.
“In order to increase shareholder representation, I commit to restructuring the board and appointing two non-executive directors to the board by the mutual consent of the founder and shareholders, right after the FY23 audit, which we expect to close by the end of this quarter. I believe this will be in the best interest of the company and allow for greater engagement with shareholders,” the BYJU’S chief noted in the letter.
(The copy was updated to reflect the accurate information from the interim order.)
Edited by Kanishk Singh
