Karnataka HC asks BJYU's shareholders not to give effect to EGM resolution till March 13
Earlier on Wednesday it was reported that Byju's rights issue for $200 million at a valuation cut of 99 per cent has been fully subscribed ahead of crucial EGM meeting on Friday.
- Feb 21, 2024,
- Updated Feb 21, 2024 10:20 PM IST
The Karnataka High Court on Wednesday asked Byju’s shareholders not to bring any resolutions in effect expected to be passed during the crucial Extraordinary general meeting (EGM) scheduled to be held on Friday, which is being hosted by select investors of Byju’s until the final hearing of its plea. The next plea is scheduled to be held on March 13.
The shareholders said that the HC had allowed EGM to happen as planned but the outcome of the meeting will be subject to the final hearing of the petition.
Byju’s moved court and filed a petition under Section 9 of Arbitration and Conciliation act asking it to restrict the select shareholders from holding the EGM on February 23.
In a statement, the edtech said that this order came after “BYJU’S filed a petition under Section 9 of The Arbitration and Conciliation Act, 1996, arguing that certain investors, including 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.”
Earlier on Wednesday it was reported that Byju's rights issue for $200 million at a valuation cut of 99 per cent has been fully subscribed ahead of crucial EGM meeting on Friday.
Raveendran will reportedly put $45-$46 million in the rights issue to preserve his shareholding in the company, which may also see some late-stage investors coming in.
The startup has also offered to restructure the board by inducting two directors in consultation with the shareholders.
This $200 million funding is expected to give the company the capital it needs to ensure that it can “take care of the current liabilities and also provide sufficient growth capital to get us back to our former glory”, Raveendran said.
“The ownership of the company does not change pre and post a rights issue, so the question of valuation itself is irrelevant as value preservation is maintained,” Raveendran said in the letter to the shareholders.
A group of key investors in troubled Byju's has requested an extraordinary general meeting on February 23 to remove its founder CEO Byju Raveendran and his family members due to mismanagement and failures at the edtech company. The shareholders organising the EGM hold over 30% of Byju's shares, while Raveendran and his family possess approximately 26% of the company.
At present, the company board has Raveendran, his wife and co-founder Divya Gokulnath and his brother Riju Ravindran. The notice sent by the investors listed has alleged financial mismanagement, erosion of value due to management's failure to enforce the company's legal rights and concealment of material information.
"The request for an EGM is supported by a consortium of Think & Learn (T&L) shareholders and follows earlier notices of requisition sent to the T&L board of directors in July and December 2023, which were disregarded..."
As per the notice, BYJU'S shareholders requested meetings with the board of directors in July and December, but their requests were ignored. BYJU'S investors do not have voting rights regarding the CEO or management changes according to the shareholder agreement.
Earlier this month, South Africa's Prosus, Peak XV Partners (formerly Sequoia Capital), General Atlantic, Sofina, The Chan Zuckerberg Initiative, Owl Ventures, and Sand Capital issued a joint statement seeking change of guard at the company.
News agency PTI reported on Tuesday the EGM notice detailing alleged financial mismanagement stated that the company management failed to explain about the show cause notice by Enforcement Directorate (ED) on alleged contraventions, failure to resolve term loan with lenders, conflict with BCCI over sponsorship and Raveendran allegedly misleading shareholders about a term loan.
Also read: Insolvency plea No. 4 against Byju's ahead of high-voltage EGM this Friday
Also read: Byju's investors call for EGM on Feb 23 to oust Byju Raveendran, family members from company board
The Karnataka High Court on Wednesday asked Byju’s shareholders not to bring any resolutions in effect expected to be passed during the crucial Extraordinary general meeting (EGM) scheduled to be held on Friday, which is being hosted by select investors of Byju’s until the final hearing of its plea. The next plea is scheduled to be held on March 13.
The shareholders said that the HC had allowed EGM to happen as planned but the outcome of the meeting will be subject to the final hearing of the petition.
Byju’s moved court and filed a petition under Section 9 of Arbitration and Conciliation act asking it to restrict the select shareholders from holding the EGM on February 23.
In a statement, the edtech said that this order came after “BYJU’S filed a petition under Section 9 of The Arbitration and Conciliation Act, 1996, arguing that certain investors, including 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.”
Earlier on Wednesday it was reported that Byju's rights issue for $200 million at a valuation cut of 99 per cent has been fully subscribed ahead of crucial EGM meeting on Friday.
Raveendran will reportedly put $45-$46 million in the rights issue to preserve his shareholding in the company, which may also see some late-stage investors coming in.
The startup has also offered to restructure the board by inducting two directors in consultation with the shareholders.
This $200 million funding is expected to give the company the capital it needs to ensure that it can “take care of the current liabilities and also provide sufficient growth capital to get us back to our former glory”, Raveendran said.
“The ownership of the company does not change pre and post a rights issue, so the question of valuation itself is irrelevant as value preservation is maintained,” Raveendran said in the letter to the shareholders.
A group of key investors in troubled Byju's has requested an extraordinary general meeting on February 23 to remove its founder CEO Byju Raveendran and his family members due to mismanagement and failures at the edtech company. The shareholders organising the EGM hold over 30% of Byju's shares, while Raveendran and his family possess approximately 26% of the company.
At present, the company board has Raveendran, his wife and co-founder Divya Gokulnath and his brother Riju Ravindran. The notice sent by the investors listed has alleged financial mismanagement, erosion of value due to management's failure to enforce the company's legal rights and concealment of material information.
"The request for an EGM is supported by a consortium of Think & Learn (T&L) shareholders and follows earlier notices of requisition sent to the T&L board of directors in July and December 2023, which were disregarded..."
As per the notice, BYJU'S shareholders requested meetings with the board of directors in July and December, but their requests were ignored. BYJU'S investors do not have voting rights regarding the CEO or management changes according to the shareholder agreement.
Earlier this month, South Africa's Prosus, Peak XV Partners (formerly Sequoia Capital), General Atlantic, Sofina, The Chan Zuckerberg Initiative, Owl Ventures, and Sand Capital issued a joint statement seeking change of guard at the company.
News agency PTI reported on Tuesday the EGM notice detailing alleged financial mismanagement stated that the company management failed to explain about the show cause notice by Enforcement Directorate (ED) on alleged contraventions, failure to resolve term loan with lenders, conflict with BCCI over sponsorship and Raveendran allegedly misleading shareholders about a term loan.
Also read: Insolvency plea No. 4 against Byju's ahead of high-voltage EGM this Friday
Also read: Byju's investors call for EGM on Feb 23 to oust Byju Raveendran, family members from company board