Byju's EGM drama: Investors clash over company's future

Disruptions lead to procedural hurdles, with mandatory roll call process delayed by difficulties in verifying identities of attendees

Photo courtesy: Byju's
Photo courtesy: Byju's

NH Business Bureau

Amidst mounting tension and corporate intrigue, the extraordinary general meeting (EGM) of Byju's shareholders convened on Friday became a battleground for competing visions of the company's future.

At the heart of the conflict lay a contentious resolution presented by a few investors seeking the ouster of founder-CEO Byju Raveendran and his family from the company's leadership, citing alleged mismanagement and failures. The voting outcomes are currently under scrutiny by an independent scrutineer.

The EGM proceedings were clearly far from smooth as reports emerged of significant disruptions and procedural hurdles, with the mandatory roll call process delayed by difficulties in verifying the identities of attendees. Some estimates put the number of people, including employees and investors, trying to attend the EGM at 170.

Sources with first-hand knowledge revealed that the virtual platform was inundated with hundreds of individuals, some attempting to impersonate legitimate investors, further complicating the authentication process. Despite initial setbacks and an erroneous notification indicating the meeting's cancellation, determined shareholders eventually prevailed, and the EGM commenced deliberations.

The agenda encompassed a range of critical issues, including proposals for governance reforms, addressing financial mismanagement concerns, ensuring compliance, and advocating for a restructuring of the leadership. Votes on these resolutions were cast amid a backdrop of uncertainty.

Byju's, however, did not take the developments lying down. The company vehemently contested the validity of the EGM, arguing that procedural irregularities and legal infringements rendered the meeting null and void. This contention was bolstered by a recent Karnataka High Court order, which deferred any resolutions pending further judicial review.

Central to the dispute are allegations of financial mismanagement, particularly concerning the loss of control of Aakash, and default on Byju's Alpha (TLB loan), raised by influential investors including Prosus, GA, Sofina, and Peak XV. Raveendran and his family, who collectively own a significant stake in the company, opted to stay away from the EGM, dismissing it as "procedurally invalid".

Preceding the EGM, a group of investors escalated the conflict by filing an oppression and mismanagement suit against Byju's management with the National Company Law Tribunal (NCLT), seeking a radical overhaul of the leadership structure, the nullification of recent rights issues, and a forensic audit of the company's accounts.

The repercussions of the EGM extend beyond the boardroom, with stakeholders closely monitoring developments that could potentially impact the company's trajectory. The outcome of the vote remains in limbo, pending validation at the next court hearing scheduled for 13 March. As the standoff continues, the future of Byju's hangs in balance, with ramifications reverberating throughout India’s edtech landscape and beyond.

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