Aakash Educational Services on Friday defended its move to amend the articles of association (AoA), stating that it was required for the company’s survival and future growth.
“We don’t want to go down the path of Think and Learn, parent firm of Byju’s. We want to stay afloat,” Aakash’s senior counsel told the National Company Law Appellate Tribunal (NCLAT).
The counsel explained that the company was not seeking a loan but intended to raise funds by selling more equity. The amendment to the AoA would help infuse much-needed capital and ensure the company’s survival.
Aakash, which is a subsidiary of Byju’s, said that the proposed change was necessary to raise capital without taking on more debt. It said that this move was necessary for the company’s financial health, particularly as it has over 10,000 employees and 300,000 students.
The NCLAT, however, declined to overturn the National Company Law Tribunal’s (NCLT’s) order, which had stayed the amendment, and remanded the case back to the tribunal. It allowed Aakash to file an application to lift the stay within a week, and NCLT has been directed to rule on the matter within three weeks.
The case relates to Aakash’s proposed AoA amendments affecting reserved rights, which Blackstone-backed Singapore Topco has challenged, citing a potential dilution of its 6.8% stake acquired through a merger framework agreement with Byju’s.
Byju’s US-based lender, Glas Trust, had expressed concerns that this move could impact the edtech firm’s ownership in Aakash, which it considers crucial to valuation.
The NCLT, on November 20, had stayed the implementation of the extraordinary general meeting resolution pending resolution of the main petition. While the Karnataka High Court briefly stayed the NCLT order on November 25, the Supreme Court on November 29 directed Aakash to not implement the AoA amendments and approach NCLAT instead.