The cash-strapped firm is now looking to raise $200 million via the rights issue | Photo: Bloomberg
Edtech giant Byju’s said that its Chief Executive Officer and founder Byju Raveendran will not attend the extraordinary general meeting (EGM) called by select investors on Friday, February 23, as it is invalid.
The current board of Byju’s parent, Think and Learn, including Raveendran, his wife and Byju’s co-founder Divya Gokulnath, and his brother Riju Ravindran will also not attend the EGM. It is expected to be conducted virtually.
Earlier this month, a consortium of key shareholders, holding over 30 per cent stake in Byju’s, issued a notice to the embattled edtech firm, calling for an extraordinary general meeting (EGM) to address “persistent issues”, including a proposed change of management at the firm. These shareholders will vote in an attempt to alter the company’s existing board, which includes asking Byju Raveendran to step down as Chief Executive Officer (CEO) and relinquish his operational role at the firm, sources said.
“This EGM is procedurally invalid, contractually in contravention of our AOA (Articles of Association) and SHA (Shareholders’ Agreement), legally on the wrong side of the Companies Act, 2013. Byju Raveendran or any other Board member will not attend this invalid EGM,” said Byju’s spokesperson. “This means the EGM, if it is still summoned, will not have the required quorum and cannot proceed to discuss or vote on the agenda. As custodians of Byju’s, it is the responsibility of the Founders to respect the established procedures of law and protect the company’s integrity.”
According to investor sources, the shareholders will go ahead with the EGM on Friday and they have the required quorum. They have more than 51 per cent of the voting power. “EGM would go ahead for a vote to remove Raveendran as CEO,” said an investor source. EGM is valid and fully in accordance with applicable law. It is Incorrect to say that EGM won’t have a quorum if founders don’t attend.”
Byju’s on Wednesday said that the Karnataka High Court, in response to a petition filed by Think & Learn Private Limited (the parent company of Byju’s), has passed an order stating that any resolutions proposed to be passed in the 23rd February extraordinary general meeting (EGM) called by select investors, are invalid until the final hearing and disposition of this petition.
Byju’s filed the petition under Section 9 of The Arbitration and Conciliation Act, 1996, arguing that certain investors, including General Atlantic, Chan Zuckerberg Initiative, MIH EdTech Investments, Own Ventures, Peak XV Partners (formerly Sequoia Capital India & SEA), SCI Investments, SCHF PV Mauritius, Sands Capital Global Innovation Fund, Sofina, and T. Rowe Price Associates, had violated the Articles of Association (AoA), the Shareholders’ Agreement (SHA), and the Companies Act, 2013 by calling for an EGM on 23 February 2024. Byju’s said that it presented compelling evidence and multiple exhibits to support its case. It sought to prevent these investors from disrupting the company’s operations by depriving it of urgently needed capital.
In its petition, Byju’s 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.
The company has raised a total of $5.08 billion from investors. The cash-strapped firm is now looking to raise $200 million via the rights issue. If the firm does that, its post-money valuation will be between $230 million and $250 million, a 99 per cent drop from the $22 billion valuation the firm had in 2022, according to the sources.
Meanwhile, the Enforcement Directorate (ED) has asked the Bureau of Immigration to issue a lookout notice against Byju’s founder Byju Raveendran concerning an alleged FEMA (Foreign Exchange Management Act) violation case involving Rs 9,362 crore. However, according to the sources, the lookout notice has been there for the last two years to monitor Raveendran’s entry and exit from the country and ED renewed it again in January this year.
First Published: Feb 22 2024 | 9:42 PM IST
