Updated February 23rd, 2024 at 18:41 IST

BYJU’s calls EGM resolutions “null and void” amid investors voting on ouster

The voting results of the meeting are still awaited

Reported by: Business Desk
Byju Raveendran | Image:Wikmedia Commons
Advertisement

Embattled edtech startup BYJU's has called the resolutions in its Extraordinary General Meeting (EGM) as “invalid and ineffective,” as the investors put the removal of founder Byju Raveendran and his family on vote.

The EGM, which concluded in the afternoon on February 23, was marred by chaos and challenges with 200 attendees including some BYJU's employees seeking entry into the virtual meeting.  

Initially scheduled for 9:30 AM, the EGM faced a delay of nearly an hour. As per reports, some entrants had named themselves as Sir Michael Knight, Natalia Cruz and Kevin Pietersen. 

Only after meticulous verification were around 40 representatives of the investors granted access to cast their votes on the resolution.

The resolution aims to replace the current board of Think and Learn, the operating firm of BYJU's, which consists of Byju Raveendran, his wife and co-founder Divya Gokulnath, and his brother Riju Raveendran. Notably, Raveendran and family own 26.3 per cent of the company. The investors hold 30 per cent in the entity.

Advertisement

Byju Raveendran, who was absent from the EGM, deemed it “procedurally invalid” in a second communication to shareholders within the same week, arguing that the meeting violates legal frameworks. 

He quoting a recent order from the Karnataka High Court, he highlighted that any decision made at the EGM would not take effect until March 13, which is the next date for the scheduled court hearing.

The dispute spilled into the legal arena with a group of four investors filing a suit for oppression and mismanagement against the edtech's management, which also seeks to declare the founders unfit to run the company. 

The suit filed also calls for appointing a new board for BYJU'S, while deeming the recently concluded $200 million rights issue as void. It also demands a forensic audit of accounts.

Advertisement

The investors, including Prosus, GA, Sofina, and Peak XV, allege various issues, including financial mismanagement leading to the loss of control of Aakash, default on a Term Loan B for its offshore entity Alpha, and governance lapses.

They have also expressed concerns about the rights offer, regulatory non-compliance, opacity in sharing information, and unauthorised corporate actions regarding the acquisition of Northwest Education Pte.

The plea seeks to prevent value erosion for shareholders and ensure the preservation of worth for employees and customers. Byju's, once valued at USD 22 billion in 2022, has seen a significant drop in valuation to USD 200 million in the recent rights issue.

Advertisement

Raveendran, in an attempt to assuage investor concerns, has pledged increased transparency on fund utilisation and a commitment to restructuring the board. However, the outcome of today's EGM will only take effect after the court hearing in March, prolonging the uncertainty surrounding Raveendran's leadership.

(With PTI inputs)

Advertisement

Published February 23rd, 2024 at 18:41 IST