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Company court asks BYJU’S to consider extending rights issue closure date

The National Company Law Tribunal said the funds received by the company in respect to the rights issue should be kept in a separate escrow account and it should not be withdrawn.

ByPTI

Published Feb 29, 2024 | 8:30 AM ⚊UpdatedFeb 29, 2024 | 8:30 AM

Byjus founder Raveendran. (X)

A company law court has asked embattled edtech firm BYJU’S to consider extending the closing date of the USD 200 million rights issue, a request that the management hinted it would not accept even as estranged investors flagged technicalities that prevented closure of the issue on Wednesday.

In an interim order dated 27 February, the National Company Law Tribunal (NCLT), Bengaluru Bench said the funds received by the company in respect to the rights issue should be kept in a separate escrow account and it should not be withdrawn till the disposal of the matter.

“The respondent company… is to consider the extension of the closure date of the rights issue so that the rights of the petitioners regarding the making of application for shares under their rights entitlement does not get prejudiced,” it said.

The next hearing has been listed for April 4.

Related: BYJU’S investors allege $533 mn siphoned off, NCLT reserves order on rights issue

The story so far…

The closure of BYJU’S rights issue, scheduled for Wednesday, will not be extended despite concerns from certain investors.
A group of investors, holding a significant portion of BYJU’S shares, are critical of the founder and CEO, alleging mismanagement and financial impropriety.
These investors question the legality of the rights issue, citing lack of shareholder authorization for increasing share capital.
BYJU’S shareholders previously voted to remove Founder-CEO Byju Raveendran and his family from the board due to alleged mismanagement and failures.
However, BYJU’S management disputed the validity of the voting process, claiming it was done in the absence of founders.
Prosus, one of the investors calling for changes at BYJU’S, stated that shareholders unanimously passed resolutions addressing governance, financial mismanagement, and leadership changes.
BYJU’S has faced challenges including financial strain post-pandemic, acquisition of Aakash, auditor resignation, bankruptcy proceedings, and legal disputes in the US.
The company’s once-storied rise has been overshadowed by recent setbacks, leading to concerns among investors and stakeholders.

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