On Friday, Byju's shareholders will cast their votes on a resolution proposed by a few investors, who want to oust founding CEO Byju Raveendran and his family due to "mismanagement and failures" at what used to be the hottest EdTech start-up in India.
The Karnataka High Court will next hear Raveendran's lawsuit opposing the action by some investors on March 13, thus the results of the vote at the extraordinary general meeting (EGM) won't matter until then.
On Wednesday, the Karnataka High Court declined to postpone the EGM, which was called by shareholders who together own more than 32 per cent of BYJU’S shares. A quarter of the corporation is owned by Raveendran and his family.
The existing board of Think & Learn, the company that runs BYJU’S, is made up of Raveendran, his brother Riju Ravindran, his wife and co-founder Divya Gokulnath, and themselves. The EGM notice demands the removal of this board.
In addition to the financial strain caused by the recent acquisition of Aakash and the pandemic that forced previously online-learning students to return to traditional classroom settings, BYJU’S has faced other setbacks in the past year, including the resignation of its auditor, the filing of bankruptcy by lenders against a holding company, and a lawsuit in the US contesting the conditions and repayment of a loan.
BYJU’S is currently valued at USD 200 million in a rights issue, down from its 2022 valuation of USD 22 billion.
To appease investors, Raveendran wrote to them this week to say he is reorganising the board and will take further measures to guarantee transparency with regards to the use of the funds. This includes adding two non-executive directors to the board with the founder and shareholders' consent.
The notification included allegations of financial mismanagement, value erosion as a result of management's claimed failure to uphold the company's legal rights, and material information concealment as the reasons for pursuing the expulsion.
According to the EGM notice outlining the alleged financial mismanagement, the company management neglected to explain the show cause notice issued by the Enforcement Directorate (ED) regarding alleged violations, the inability to settle a term-loan dispute with lenders, the disagreement over cricket sponsorship with the BCCI, and the alleged misrepresentation of a term-loan by Raveendran to shareholders.
Other charges include not finishing the audits and delaying paying statutory obligations — such as taxes withheld at source, provident fund contributions, and deductions.
Additionally, there are claims that payments for duties owed to workers, such as final settlements for departing employees, have been delayed.
General Atlantic, Peak XV, Sofina, Chan Zuckerberg, Owl, and Sands, who jointly own around thirty per cent of Byju's, have supported the EGM notice.
