The National Company Law Tribunal (NCLT) on March 28 refused to defer an extraordinary general meeting called by the board of directors of embattled edtech company Byju’s to raise the authorised capital to give effect to the rights issue.
The tribunal has now listed the case for hearing on April 4 in where other issues will be addressed too.
The EGM scheduled for March 29 will include a vote on increasing Byju's' authorised share capital which will give effect to the rights issue floated by the company to raise funds to tide over its massive liquidity crisis.
During the hearing, investors claimed that the EGM has been called to increase the authorised capital of the company and to also amend the memorandum of association.
Investors v/s Byju's
According to the investors, the EGM has been called to defeat the purpose of the NCLT’s order dated February 27.
On February 27, the NCLT directed Byju's to keep funds received from the rights issue in an escrow account till the disposal of the oppression and mismanagement plea filed by the four investors.
The tribunal had further directed Byju's to "consider the extension of the closure date of the right issue so that the rights of the petitioners about the making of applications for shares under their rights entitlement does not get prejudiced".
The NCLT reserved the plea to halt the rights issue for orders. An order is yet to be passed.
During the hearing on March 28, investors further argued that Byju’s did not permit them to conduct an inspection of the documents to decide on how to vote at the EGM. According to the investors all the shareholders have not been served the notice of the EGM as per law.
Byju’s argued that the investors were provided with an opportunity to conduct the inspection and the notice calling for the EGM has been served on all shareholders.
Thus the NCLT noted that since the case is anyway coming up for hearing on April 4, they do not find any reason to pass an interim order now.
Previous arguments in the case at NCLT
At the previous hearing in NCLT, the investors had argued that the company's move to call for rights issue was illegal and contrary to law and should be stayed. While the board of directors, which includes founder Byju Raveendran, his wife and cofounder, Divya Gokulnath, and his brother Riju Raveendran, argued that the investors were creating obstructions for the company.
Shortly after the order, the investors filed pleas in the Supreme Court, requesting that they be heard before the court decides on a plea likely to be filed against the National Company Law Tribunal (NCLT) order.
MIH Edtech Investments BV, Peak XV Partners Investments, Sofina SA and General Atlantic Singapore TL Pte Ltd filed separate caveats in the apex court on March 4.
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