Embattled edtech firm Byju's said that the founder Byju Raveendran and the company's other board members, which include his wife, Divya Gokulnath, and brother, Riju Raveendran, won't attend the extraordinary general meeting (EGM) called by the company's investors on February 23 to oust the top management.
"This EGM is procedurally invalid, contractually in contravention of our AOA and SHA, legally on the wrong side of the Companies Act, 2013. Byju Raveendran or any other Board member will not attend this invalid EGM. This means the EGM, if it is still summoned, will not have the required quorum and cannot proceed to discuss or vote on the agenda. As custodians of Byju's, it is the responsibility of the Founders to respect the established procedures of law and protect the company's integrity," said a Byju's spokesperson.
However, investor sources claimed that the EGM is valid and fully in accordance with applicable law and said that it will continue as per plan. They also said that it would be 'incorrect to say that EGM won’t have quorum if founders don’t attend'.
This comes after the company's investors, such as Prosus, General Atlantic, Peak XV, Sofina and others, called for an extraordinary general meeting, in a bid to oust the company's leadership and reconstitute its Board.
Byju’s had then filed a petition under section 9 of Arbitration and Conciliation Act asking the court to restrain its shareholders from holding the EGM.
While the court has allowed the EGM to happen as planned, it restricted the implementation of resolutions passed at the meeting till the final hearing of the petition in March.
Byju's rights issue to raise $200 million at a valuation cut of 99 percent has been fully subscribed, Raveendran said in a shareholder letter earlier this week.
Sources said that the company's founder is set to put $45-$46 million in rights issue to preserve his shareholding in the company. According to people close to developments, some late stage investors who came in later rounds of funding are also keen to join the issue.
In the letter, Raveendran committed to restructuring the Board and appointing two non-executive directors to the Board by the mutual consent of the founder and shareholders after the FY23 Audit, which is expected to close by the end of the quarter.
Byju's, which was once India's most-valued startup, has been under fire since the start of 2022 for a range of issues, including accounting irregularities, alleged mis-selling of courses, and mass layoffs.
The company has laid off thousands of employees in the last 12 months as it battled a double blow of drying venture capital funding and slowing demand for online learning services. Since then, its investor board members have left too, citing differences with Raveendran.
The company has tried to fix some of the problems since then. Its early investor Ranjan Pai ploughed in the capital, it set up an advisory council with veterans such as Mohandas Pai and Rajnish Kumar and elevated Arjun Mohan as CEO. It is also in talks to divest assets such as Great Learning and Epic.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
