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Investor group accuses Byju’s of violating NCLT order; hearing deferred to June 6
KV Prasad Jun 13, 2022, 06:35 AM IST (Published)
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Summary
The allegations were made during a hearing of the oppression and mismanagement plea filed against Byju’s by its investors Peak XV Partners, General Atlantic, Chan-Zuckerberg Initiative, and Prosus at the National Company Law Tribunal (NCLT) today.
A group of four investors has accused edtech company Byju’s of violating the court’s orders by issuing shares to founders before increasing the authorised share capital under its recently concluded rights issue.
The allegations were made during a hearing of the oppression and mismanagement plea filed against Byju’s by its investors Peak XV Partners, General Atlantic, Chan-Zuckerberg Initiative, and Prosus at the National Company Law Tribunal (NCLT) today.
The investors’ counsel told the NCLT bench that Byju’s parent Think and Learn Private Limited (TLPL) was in violation of the orders of the February 27 interim order of the court and had issued shares to the Founders before increasing the authorised share capital.
The investors claimed that this was done as a “deliberate ploy” to change the capital structure without which Think and Learn Private Limited would not have been able to pass the shareholder resolutions to increase the authorised share capital.
The NCLT on February 27 had passed an interim order in the matter, directing Byju’s to not allot shares to investors participating in the rights issue without increasing the authorised share capital and asked the company to keep the proceeds of the rights issue in an escrow account until final orders.
Investor sources CNBC-TV18 spoke to alleged that TLPL and its founder Byju Raveendran had breached their own undertakings and contravened the Interim Orders. The contravention, investors told CNBC-TV18, was “evidenced by the allotment of 8,14,530 shares to Riju Raveendran, director on the board of Byju’s and founder Byju Raveendran’s brother, on March 2, 2024.”
Byju’s counsel, on the other hand, refuted any claims that the company had violated the court’s February 27 directions. BYJU’S counsel KG Raghavan assured the NCLT judges during the hearing that the company had fully complied with the court’s order dated February 27, 2024.
Sources at Byju’s told CNBC-TV18 that the founder himself had to take personal debt to honor employees’ salaries for March, which have now been partially paid out, which showed that there has been no violation.
Byju’s had sought relief from the NCLT to allow it to use proceeds from the USD 200 million Rights Issue to tackle the ongoing liquidity crunch, including unpaid salaries, regulatory dues, and vendor payments.
With no relief in sight from the court on the use of funds from its rights issue just yet, it remains unclear how the company will meet its obligations and manage to pay its employees or vendors in the coming months.
The court has next listed the matter for hearing on June 6, 2024.
Also read: Byju Raveendran raises ₹30 crore in personal debt to pay partial March salaries: Sources
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