A consortium of investors, including Prosus, GA, Sofina, and Peak XV, with support from Tiger and Owl Ventures, has initiated legal proceedings against Byju Raveendran and the management, alleging mismanagement and failures. The lawsuit has been filed before the Bengaluru bench of the National Company Law Tribunal (NCLT), seeking a declaration that the founders, including CEO Byju Raveendran, are unfit to lead the company.
The investors are also pushing for the appointment of a new board and challenging the validity of the recently-concluded rights issue.
A group of investors, including prominent names such as Prosus, GA, Sofina, and Peak XV, has filed a lawsuit against Byju Raveendran and the management, accusing them of mismanagement and failures. The legal action, lodged at the Bengaluru bench of the National Company Law Tribunal (NCLT), demands a declaration of the founders' incompetence to lead the company.
Investors, supported by Tiger and Owl Ventures, are pushing for the ouster of Byju CEO Byju Raveendran and his family from the board of Byju's at an extraordinary general meeting (EGM) of shareholders. The legal proceedings also include a request for a new board to be appointed to the company.
The group of investors has raised concerns about the recently-concluded $200 million rights issue, seeking its declaration as void. The legal action underscores their determination to prevent any value erosion for shareholders and to preserve the interests of other stakeholders, including employees and customers.
In addition to seeking a change in leadership, investors are demanding a forensic audit of the company. The legal plea also calls for a directive to the management to share information transparently with the investors, emphasizing the need for clarity and accountability.
The legal action highlights concerns about financial mismanagement by the founders, leading to the loss of control of Aakash, defaults in Byju's Alpha (TLB loan), and prolonged corporate governance issues such as the non-appointment of a CFO and an independent director.
The plea specifically points out regulatory non-compliances, the "oppressive nature" of the rights offer, and "wilful defaults" in sharing information with stakeholders. It also raises objections to unauthorized corporate actions related to the acquisition of Singaporean edtech company Northwest Education Pte.
Meanwhile, an extraordinary general meeting held by Byju's parent company, Think & Learn Pvt. Ltd, faced disruptions allegedly caused by a few individuals. The disruptions included alleged sabotage and a delay in starting the meeting due to the time-consuming verification of attendees.
The core demands of the lawsuit include:
Removal of Byju Raveendran and his family from the company's board.
Appointment of a new board to oversee Byju's operations.
Declaration of the recently concluded $200 million rights issue as void.
Forensic audit of the company's finances.
Transparency and information sharing with investors.
These demands highlight the investors' dissatisfaction with the current leadership and their desire for significant changes within Byju's governance structure.
The lawsuit details several specific concerns raised by the investor group, including:
Financial mismanagement: The investors allege that financial mismanagement by the founders led to the loss of control of Aakash Educational Services Limited (Aakash) and defaults on loans related to Byju's Alpha.
Corporate governance issues: The lawsuit points to a lack of transparency, including the absence of a Chief Financial Officer (CFO) and an independent director on the board.
Oppressive rights offer: The investors claim that the recent rights issue was conducted in an "oppressive manner," unfairly favoring certain stakeholders.
Unauthorized actions: The lawsuit alleges unauthorized corporate actions regarding the acquisition of Singaporean edtech company Northwest Education Pte. Ltd.