NCLT directs BYJU’S to maintain shareholding ‘status quo’

The National Company Law Tribunal (NCLT), in an order dated June 12, has directed BYJU’S to maintain the “status quo” for existing shareholders and their shareholding until the main matter—the rights issue which is part of an oppression and mismanagement suit.

Back in January, the Byju Raveendran-led edtech firm floated a rights issue to raise $200 million through equity rights. Subsequently, a group of BYJU'S investors, including Prosus, General Atlantic, and Peak XV, sought to void the rights issue by appealing to the NCLT.

The order dated June 12, noted, “This Tribunal hereby restrains the Respondents (BYJU’S) from going ahead with the present rights issue which is in progress till the disposal of the main (petition).”

The “present rights issue” refers to a “second rights issue” proposed by BYJU’S through an offer letter dated May 11. This issue started on May 13 and is scheduled to end on June 13.

“The Respondents are further directed to keep the amounts collected so far since the opening of the second rights issue in relation to this offer in a separate account which should not be utilised till the disposal of the main petition,” the NCLT order noted.

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The tribunal also directed the respondents, including BYJU’S, to submit full details of the allotment made on March 2, including names, equity shares held on January 27, entitlements under the rights offer, equity shares allotted on March 2, shares allotted after the increase of authorised share capital, amounts paid by each person with dates, and the amounts used for the rights issue shares.

The order also sought similar details for preference shareholders, including shares allotted on March 2 and any shares allotted after the increase of authorised share capital.

In addition to this, the order sought complete details of the relevant escrow bank accounts from the opening of the rights issue on January 29 to the present date. 

All the details have to be filed within a period of ten days from the date of the order. The matter is next listed for July 4, 2024.

Earlier, the NCLT, in an order dated February 27, directed that the funds received by BYJU’S from the $200 million rights issue be placed in a separate escrow account. These funds were not to be withdrawn until the resolution of the oppression and mismanagement suit filed by a group of BYJU'S investors against the company's management.

Meanwhile, last week, amid the ongoing dispute between BYJU’S and its lenders, certain term holders and a term loan agent filed petitions in Delaware Bankruptcy Court to start involuntary Chapter 11 bankruptcy proceedings against BYJU’S subsidiaries Epic, Tynker, and Osmo.

Amid increasing challenges for the Bengaluru-based company, HSBC recently valued Prosus' stake in BYJU’S at zero. Prosus, BYJU’S largest institutional shareholder, has invested approximately $536 million in the company to date, holding around 10% ownership in the edtech firm.