BYJU'S says fully compliant with FEMA regulations, expects to pay nominal fines, if any

Education tech company BYJU'S said on Wednesday it had received a notice from Enforcement Directorate (ED) and expected to pay a nominal fine, if any, over alleged violations of FEMA regulations.

ED had said last week that BYJU'S violated Foreign Exchange Management Act norms by delaying the filing of documents against the foreign investment of about Rs 8,000 crore and failing to allot shares against these.

BYJU'S said the queries raised by the ED in show cause notice are "solely technical in nature," and based on precedents, it expects fines, if any, will be nominal.

The queries received in the notice are solely technical in nature such as delay in filing Annual Performance Reports (APRs) with respect to duly compliant ODI investments of close to Rs 8,000 crore that arose from the delayed statutory audit (FY22). The Company has however filed requisite intimation contemporaneously for all FDI which is received in accordance with the eligibility criteria in law and not affected by the alleged non filing of APR. The Company has also issued/allotted shares within the prescribed time against the FDI so received," said BYJU'S in a statement.

The Bengaluru-headquartered company said it "maintains and will continue to maintain adherence to all relevant FEMA regulations".

"Based on precedent actions by the Adjudicating Authority, we anticipate that the fines, if any, will be nominal. To cite an example, the Late Submission Fee for such reporting delays that can be imposed pursuant to the RBI regulations with respect to APRs is very nominal (Rs 7,500) and by no means does the notice denote a fine. We would like to strongly emphasise that the ED notice does not specify any quantum of fine but rather highlights the quantum of FDI/ODI (Rs 9,000 crore) along with the deadlines that we missed in the reference period for this quantum. We want to reassure you that BYJU'S maintains and will continue to maintain complete adherence to all relevant FEMA regulations, as verified by comprehensive due diligence conducted by reputable law firms," said the Byju Raveendran-led firm.

BYJU'S has delayed publishing its financial results, prompting auditor Deloitte and three board members to quit in June, followed by the departure of its chief financial officer and chief technology officer.

The notice comes amid a string of setbacks for the company, which was valued at $22 billion last year but was valued by tech investor Prosus NV earlier on Wednesday at under $3 billion.

The federal probe agency had in April searched two business and one residential premises, including that of the registered company of BYJU’s under FEMA provisions.

The ED had in April said in a statement that it seized various “incriminating documents and digital data” after the searches.

It had alleged “the company (Think & Learn Pvt Ltd) has not prepared its financial statements since 2020-21 and has not got the accounts audited which is mandatory”.

The company filed its 2021-22 results after a long delay early this month.

The ED said the searches were conducted on the basis of “various complaints” received by private people and alleged that Raveendran Byju was issued “several” summons but he remained “evasive and never appeared” before the ED.

The searches found that the company received Foreign Direct Investment (FDI) to the tune of about Rs 28,000 crore during 2011-2023, as per ED.

“The company also remitted about Rs 9,754 crore to various foreign jurisdictions during the same period in the name of overseas direct investment,” the agency said.

“The company has booked around Rs 944 crore in the name of advertisement and marketing expenses including the amount remitted to foreign jurisdiction,” the ED alleged.

The Bengaluru-based company provides early learning, middle school education and test preparation, among others and Raveendran Bjyu co-founded the e-learning company with his wife Divya Gokulnath.

The company earlier this month reported narrowing of operational losses in core business to Rs 2,253 crore for 2021-22.

With inputs from agencies