SFIO begins probe into Byju's alleged governance lapses, compliance failures: Report

Byju's three directors resigned on June 22.

In what could spell further trouble for Byju's, a report has claimed that the Serious Frauds Investigation Office (SFIO) has initiated a probe into the edtech company's alleged governance lapses and financial reporting compliance failures.

The SFIO, which is a multidisciplinary body under the Ministry of Corporate Affairs, has commenced the investigation in Byju's case, stated The Hindu Business Line report on July 8, citing sources who are privy to the matter.

The newspaper, however, clarified that Byju's said it has not received any communication from the SFIO on the launch of such a probe till date.

An official confirmation on the news report was also awaited, and Moneycontrol could not independently verify the development.

"Our client is not aware of any such discussions, this news is completely speculative and I am not sure of its source," said Zulfiquar Memon, Managing Partner, MZM Legal LLP, representing Byju's.

"We are confident in our compliances and are prepared to address any queries or concerns raised by the authorities in a timely responsible and co-operative manner," he added.

The report comes around two weeks after three key directors representing some of the largest shareholders of Byju's--GV Ravishankar of Peak XV Partners (Sequoia Capital India), Russel Dreisenstock of Prosus and Vivian Wu of Chan Zuckerberg Initiative, stepped down from the board of Byju's over differences with founder Raveendran.

The same day, Deloitte, Byju's auditor and one of the largest audit firms globally, also resigned citing a "long delay" in the company's FY22 (2021-22) results.

Amidst the crisis, Byju's founder Byju Raveendran organised an extraordinary general meeting on July 4, where he told shareholders that a Board Advisory Committee will be formed to provide advice and guidance to the CEO on matters pertaining to the composition of the board and the governance structure suitable for Byju's.