BYJU'S dramatic EGM ends, Karnataka HC to decide founder's ouster
What's the story
BYJU'S held an extraordinary general meeting (EGM) today to vote on the removal of CEO and founder Byju Raveendran. The meeting faced challenges such as phishing attacks and unauthorized attendees but continued as planned despite all the disruptions. Voting results are anticipated in the next few hours. However, irrespective of the voting results, Raveendran's ouster now depends on the Karnataka High Court's hearing scheduled for March 13.
Disruptions
Sabotage attempts at BYJU'S EGM
The EGM was disrupted by unknown individuals attempting to sabotage the event through various means. It took over an hour to complete the roll call and verify attendees, as hundreds tried to join the Zoom link with fake names or by impersonating investors. After verification, 37 pre-authorized individuals attended the meeting, including eight BYJU'S employee-shareholders, five legal representatives, and 24 investors.
Founder skips EGM
Raveendran and his family sat out of the meeting
Raveendran, his co-founder and wife Divya Gokulnath, and his brother Riju chose not to attend the EGM. The three board members hold about 26.3% shares in Think and Learn Pvt. Ltd.—BYJU's parent company—while investors seeking their removal have a shareholding of over 30%. Voting has concluded and an independent scrutinizer will submit the final results after the vote count.
Court hearing ahead
Voting results to be sanctioned by Karnataka High Court
Think and Learn had filed a plea on February 21 opposing today's EGM. The court's interim order stated that decisions from the EGM will not be implemented until the next hearing. Advocates for Think and Learn alleged that the EGM did not follow the procedure outlined under Section 100(3) of the Companies Act, 2013.
The crisis
No end to BYJU'S financial mess
BYJU'S investors called for the EGM due to the company's financial crisis. The ed-tech giant's troubles include allegations of foreign exchange violations, insolvency bids, drastically reduced valuations, lack of transparency in fund utilization and hostile investors. The Enforcement Directorate has also restricted Raveendran from leaving India as the agency investigates alleged violations of Rs. over 9,360 crore under the Foreign Exchange Management Act (FEMA).
NCLT appeal
Investors move NCLT against BYJU'S's rights issue
On February 21, BYJU'S raised $200 million by a rights issue after trimming its valuation by 99%. However, a consortium of four investors have approached the National Company Law Tribunal (NCLT) against the fundraiser, alleging mismanagement and suppression of investors' rights. Mint reported that Prosus, General Atlantic, Sofina, Peak XV Partners have filed the petition before NCLT's Bengaluru bench with support from Tiger Global and Owl Ventures.