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The National Company Law Tribunal (NCLT) has declined investors’ request to halt Byju’s extraordinary general meeting (EGM), slated for March 29, despite ongoing legal challenges. The Bengaluru bench of the tribunal also dismissed the plea for an independent overseer, setting the stage for a crucial legal battle in the corporate world.
Byju’s had planned the EGM to approve an increase in the company’s authorised share capital following a recent $200 million rights issue. However, investors raised concerns about the timeline and transparency of the process, leading to the legal dispute.
Representing the investors, senior advocate Sudipto Sarkar urged the tribunal to intervene before proceeding with the EGM. The investors argued that Byju’s plan to conclude the rights issue and formalities within 60 days was unrealistic, rendering the EGM meaningless. Additionally, they highlighted discrepancies in the meeting notice distribution, claiming it was not sent to all stakeholders.
This legal skirmish emerged after four investors, including Prosus with a significant stake in Byju’s, filed a case with the NCLT against 12 entities and individuals associated with Byju’s, including Founder Byju Ravindran and CEO Raveendran. The investors sought the removal of Byju’s management and the cancellation of the recent rights issue.
On February 27, the NCLT issued an interim order directing that funds received through the rights issue be held in a separate escrow account until the legal matter is resolved, safeguarding investor interests amid the dispute.
Despite the legal challenges, Byju’s is determined to proceed with the scheduled EGM on March 29 to formalise the increase in authorised share capital. The outcome of this legal battle will have significant implications for Byju’s corporate governance and future strategic decisions.
The NCLT has scheduled the next hearing for April 4, indicating that the legal tussle surrounding Byju’s is far from over, with both investors and the company’s management digging in their heels in this high-stakes corporate clash.
Sources By Agencies
