NCLT Declines Stay on BYJU’S EGM for $200M Rights Issue Amid Investor Dispute
- ByStartupStory | March 29, 2024
In a recent development surrounding the tech education giant BYJU’S, the National Company Law Tribunal (NCLT) has refused to halt the scheduled extraordinary general meeting (EGM) slated for March 29. This decision comes amidst a dispute initiated by a group of investors led by Prosus, challenging the EGM called by Think and Learn Private Limited (TLPL), BYJU’S parent company.
The controversy stems from BYJU’S move to increase its authorized share capital for a $200 million rights issue. Despite objections raised by the investors, the NCLT opted not to intervene, marking a significant development in the ongoing legal tussle. The tribunal has, however, listed the case for further deliberation on April 4, keeping the matter open for legal scrutiny.
Earlier directives from the NCLT, dated February 27, instructed BYJU’S to place the funds garnered through the rights issue into a separate escrow account. This measure aims to safeguard the funds pending the resolution of an oppression and mismanagement lawsuit filed by a consortium of four investors against the company’s management.
Prominent stakeholders in BYJU’S, including Prosus, General Atlantic, Sofina, and Peak XV, have spearheaded the legal challenge. The investors are pressing for the annulment of the $200 million rights issue before the NCLT’s Bengaluru bench. This move follows BYJU’S decision in January to initiate the rights issue, seeking to secure $200 million through equity rights at a reduced enterprise valuation of approximately $220 million. This valuation represents a stark 99% decline from its peak valuation of $22 billion.
In response to inquiries, BYJU’S clarified that the rights issue was crucial to address immediate financial obligations, including pending employee salaries. However, the legal skirmish unfolding in the NCLT Bengaluru bench underscores the complexity of challenges facing the edtech firm.
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