The National Company Law Tribunal (NCLT) rejected investors' plea to halt Byju's extraordinary general meeting (EGM) scheduled for Friday, March 29. The Bengaluru bench of the tribunal also turned down the request for an independent overseer. Despite this setback, the NCLT has scheduled the next hearing for April 4.
Byju's had intended to conduct the EGM to increase the company's authorised share capital following a recent $200 million rights issue. According to sources, the investors approached the NCLT to stop the EGM initiated by Byju's, but the court declined to provide immediate relief.
Representing the investors, senior advocate Sudipto Sarkar urged the tribunal to look into the matter before proceeding with the EGM. Investors said Byju's plan to finish the rights issue and formalities in 60 days (ending on March 29) was not possible, rendering the EGM pointless. Moreover, according to investors, the meeting notice was not sent to all stakeholders.
This happened after four investors filed a case with the NCLT against Byju's, targeting 12 entities and individuals, including Byju's Founder Byju Ravindran and his associates. The petition aims to remove Byju's management, including CEO Raveendran, and cancel the recent rights issue.
The investors, led by Prosus, which holds a significant stake in Byju's, called for the EGM on February 23. The investors, who hold approximately 32% stake in Byju's, claimed that over 60% of investors present voted in favour of resolutions, including the removal of the CEO. However, sources close to Byju contested this, stating the number was 47%. Byju's has taken the matter to the Karnataka High Court, putting the resolution passed by investors on hold.
On February 27, the NCLT, Bengaluru Bench, issued an interim order stating that funds received by Byju's through the rights issue must be held in a separate escrow account. The funds should not be withdrawn until the legal matter is resolved.
Despite the ongoing legal tussle, Byju's remains determined to proceed with its planned EGM on March 29 to increase the company's authorised share capital following the recent $200 million rights issue.