Wednesday was a mixed day for Byju’s. In what can be termed as an interim relief, the Karnataka high court ruled that any resolution proposed to be passed at the company’s extraordinary general meeting on Friday will not be valid till the edtech firm’s petition is fully heard and disposed of by the court.
However, the day also saw the fourth insolvency petition against the company being admitted by the Bengaluru bench of the National Company Law Tribunal (NCLT). The petition has been filed by US-based non-bank loan agency Glas Trust Company LLC.
Byju’s has moved the Karnataka high court under Section 9 of the Arbitration and Conciliation Act, 1996, arguing that certain investors, had violated the articles of association (AoA), the shareholders agreement (SHA), and the Companies Act, 2013 by calling for an EGM on February 23, 2024.
The group of investors include, 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.
Byju’s said that it is seeking to prevent these investors from disrupting the company’s operations by depriving it of urgently needed capital.
In its petition, Byju’s has highlighted that the purported reasons for the EGM, including the removal of Byju Raveendran as CEO and chairman, as well as Divya Gokulnath and Riju Raveendran as directors, were merely a smokescreen designed to disrupt the management, control, and functioning of the company.
It has argued that the proposed EGM was vexatious and devoid of merit, put forward to disrupt the ongoing rights issue which offers all shareholders an equal opportunity to maintain their shareholding in the company via participation. Byju’s emphasised its commitment to providing fair and equal opportunities for all shareholders to participate in the rights issue.
“The court’s decision to grant immediate relief to Byju’s by invalidating the resolutions passed by the EGM, underscores its recognition of the need to protect Byju’s best interests, and uphold the principles of corporate governance. The ruling ensures that the company can continue its operations with stability and focus, safeguarding the interests of all stakeholders,” the company said in a statement. It said that it remains confident in its ability to navigate the current challenges and thanks all its shareholders for their overwhelming participation in the ongoing rights issue.
As reported earlier, to oust the board, the majority –50% plus one share – of votes cast should be in favour of the resolution. Raveendran and his family are the largest shareholder with a 26% stake in Byju’s.
The group of investors, who have given notice for the EGM, together own over 25%, but won’t participate in the meeting as they do not have voting rights. This is because they had signed a shareholder agreement that does not give them voting rights. Other shareholders own over 45% in Byju’s.
