NCLT directs BYJU’S to put rights issue fund in escrow, calls for review of closure date
Although the tribunal has directed BYJU’S to consider extending the closure date of the rights issue, there is no current stay on the process.
The National Company Law Tribunal (NCLT), in an order dated February 27, directed that the funds received by BYJU’S with respect to the rights issue should be placed in a separate escrow account.
These funds are not to be withdrawn until the disposal of the oppression and mismanagement suit filed by a group of four investors of against the management of the company, the order noted.
The NCLT’s order also directed BYJU’S to “consider the extension of the closure date of the right issue so that the rights of the petitioners with regard to the making of application for shares under their rights entitlement does not get prejudiced”.
“The matter is reserved for passing of order on the interim reliefs requested,” the order stated, adding that both sides’ senior lawyers must submit a concise document within three days.
“A period of two weeks is granted to the Authorities for filing reply from the date of receipt of copy of the notice and two weeks thereafter for filing response/rejoinder, if any, thereto from the date of receipt of copy of reply is granted. List the case for further hearing on 04.04.2024,” the order noted.
The tribunal issued the above directive after considering all submissions from the senior counsels on both sides and reviewing the materials on record.
BYJU’S' senior counsel assured that shares will not be allotted without increasing the authorised share capital per the Companies Act, 2013. Also, the funds received from the rights offer will be kept in a separate account and will not be utilised for any purposes.
Although the tribunal has directed BYJU’S to consider extending the closure date of the rights issue, there is no current stay on the process. The rights issue is ongoing and is expected to close as scheduled today.
Major investors in BYJU’S are reportedly expected to opt out of participating in the edtech firm’s rights issue.
The NCLT order also noted the issuance of notices to various authorities, including the Secretary of the Ministry of Corporate Affairs, Regional Director (South-East Region) Hyderabad, Registrar of Companies in Karnataka (Bengaluru), Reserve Bank of India in Bengaluru, and SEBI.
The petitioners of the lawsuit filed at the NCLT’s Bengaluru bench include prominent investors in BYJU’S such as Prosus, General Atlantic, Sofina, and Peak XV. This NCLT suit represents one of the ongoing battles for the edtech company.
Edited by Kanishk Singh