NCLT to hear investors' oppression, mismanagement plea against Byju’s today. Here's what you need to know

 

In the midst of tough waters for edtech firm Byju’s, the National Company Law Tribunal (NCLT) has listed an oppression and mismanagement plea filed by four investors against Byju's for hearing on Tuesday. The plea will be heard by a bench comprising judicial member K. Biswal and technical member Manoj Kumar Dubey. This is the fifth plea filed against Byju's in NCLT and the fourth one filed in 2024. 

The investors who have moved the NCLT against Byju's include MIH Edtech Investments B. V, Peak XV Partners Investments IV, Peak XV Partners Investments V, Sofina S. A. and General Atlantic Singapore TL Pte. Ltd.  The plea was moved around the time another group of investors called for an Extraordinary General Meeting (EGM). 

What do the investors want from NCLT? 

The suit filed by the shareholders also seeks a forensic audit of the company, appointment of a new board and declaring the recently conducted $200 million rights issue as void. The aggrieved investors want the present management which includes Byju Raveendran, his wife Divya Gokulnath and his brother Riju Raveendran to be declared unfit to run the company. 

Byju’s response on the plea

Responding to the NCLT move, Byju’s said in a statement that the resolutions taken by shareholders are invalid and ineffective. 

“BYJU’s firmly declares that the resolutions passed during the recently concluded Extraordinary General Meeting (EGM)-- attended by a small cohort of select shareholders– are invalid and ineffective. The passing of the unenforceable resolutions challenges the rule of law at worst,” the company statement read. 

What happened at the previous Byju’s EGM? 

At the EGM held on February 23, investors voted to remove Raveendran and his family from the edtech company. A spokesperson from Prosus said the EGM passed a series of resolutions including a request for outstanding governance, financial mismanagement and compliance issues at Byju’s and the reconstitution of the Board of Directors so that the edtech firm is no longer controlled by founders of Think & Learn, the parent company of Byju’s. 

“As shareholders and significant investors, we are confident in our position on the validity of the EGM meeting and its decisive outcome, which we will now present to the Karnataka High Court in line with due process,” the Prosus statement further read.  However, they cannot implement this resolution after the Karnataka High Court passed an order asking Byju’s shareholders not to bring in effect any resolutions passed during the EGM. 

Byju Raveendran assures employees of status quo

A day after shareholders voted to remove the founders from the board and key positions, founder and CEO Byju Raveendran said he “continues to remain the CEO, the management remains unchanged and the board remains the same”. 

In a letter to the employees, Raveendran refuted the claims made by a small group of select minority shareholders that they had unanimously passed the resolution in the EGM. He said the governance of the company is anchored in the Articles of Association and the Shareholder Agreement, further reinforced by the prevailing company law. 

At the EGM, a lot of these essential rules were violated, Raveendran said. Consequently, any resolutions taken at the meeting are not enforceable as per law.”

Are investors the only ones knocking on the doors of the NCLT?

Other NCLT pleas against Byju's have been filed by the Board of Control for Cricket in India (BCCI), France-based Teleperformance Business Services, and digital marketing firm Surfer Technologies. The NCLT has issued notice in all the insolvency petitions filed against Byju's. US-based non-bank loan agency Glas Trust Company has also filed an insolvency plea against the company.