BYJU’S Asserts Full Compliance with FEMA Regulations, Anticipates Minimal Fines

• ByStartupStory     |    November 30, 2023

Education technology company BYJU’S disclosed on Wednesday that it has received a notice from the Enforcement Directorate (ED) regarding alleged violations of FEMA regulations. The ED had accused BYJU’S of breaching Foreign Exchange Management Act norms by delaying the filing of documents related to foreign investments amounting to approximately Rs 8,000 crore, failing to promptly allot shares against these investments.

BYJU’S responded to the ED notice, stating that the queries raised are “solely technical in nature” and anticipates any fines imposed, if at all, will be nominal. The company clarified that the queries revolve around the delay in filing Annual Performance Reports (APRs) linked to ODI investments, which totaled nearly Rs 8,000 crore and stemmed from delayed statutory audits for the fiscal year 2022.

The Bengaluru-based firm assured that it has consistently adhered to all relevant FEMA regulations, emphasizing the comprehensive due diligence conducted by reputable law firms to verify compliance. BYJU’S highlighted its proactive approach in filing requisite intimation for all FDI, unaffected by alleged APR non-filing. The company has also issued and allotted shares within the stipulated time frame against the received FDI.

Despite facing setbacks, including delays in publishing financial results leading to key resignations and a revaluation by tech investor Prosus NV that valued BYJU’S at under $3 billion, the company remains steadfast in maintaining regulatory compliance. The ED notice adds to a series of challenges for BYJU’S, which was valued at $22 billion last year.

The federal probe agency’s actions began in April when searches were conducted at business and residential premises, including BYJU’s registered company, under FEMA provisions. The ED asserted that BYJU’S received substantial Foreign Direct Investment (FDI) and remitted significant amounts to foreign jurisdictions. Allegations also included the company’s failure to prepare financial statements since 2020-21 and non-compliance with mandatory audits.

BYJU’S responded to these allegations by filing its 2021-22 results after a prolonged delay this month. The company, co-founded by Byju Raveendran and Divya Gokulnath, offers early learning, middle school education, and test preparation services. The ED’s ongoing scrutiny raises questions about the company’s financial practices and regulatory adherence, adding complexity to its current challenges.

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