The National Company Law Tribunal (NCLT) on June 12 directed embattled edtech company Byju's to maintain status quo with regard to existing
shareholders and their shareholding.
"Status quo with regard to existing shareholders and their shareholding shall be maintained till the disposal of the main petition," the order that was made available on June 13 said.
The order restrained Byju's from going ahead with the second rights issue, which according to the investors commenced on May 13 and was to end on June 13. Byju's has been restrained from utilising any funds that it has so far collected from the second rights issue, the same is to be deposited in a separate account.
"This Tribunal hereby restrains the Respondents (Byju's) from going ahead with the present rights issue which is in progress, till the disposal of the main plea. The Respondents are further directed to keep the amounts collected so far since opening of the second rights issue...in a separate account which should not be utilised till the disposal of the main petition," the order said.
The tribunal also directed directed Byju's to file the complete details of the concerned escrow bank accounts from the opening of the right issue on January 29 till date in 10 days from June 12.
Furthermore, Byju's must file the complete details of the allotment made on March 2 before the increase of authorised share capital." This must include information such as the name of the shareholder, equity shares held on January 27, entitlement as per rights offer and equity shares allotted on March 23; and also equity shares allotted after increased of Authorised share capital, the order noted.
Moneycontrol has reached out to Byju's for a comment. The story will be updated once a response is received.
The order was passed in an application filed by the investors of the company such as Peak XV Partners, General Atlantic, Chan-Zuckerberg Initiative and Prosus. The investors had filed a plea in the NCLT to halt Byjus' second rights issue as it would further dilute their holding in the company.
During the hearing, the investors alleged that Byju's had not deposited the money it received from rights issue prior to February 27 in the escrow account.
They had further alleged that alotted shares to those who participated in the rights issue, overlooking the tribunal’s order to maintain status quo as far as the share holding was concerned.
In its order on February 27, NCLT directed Byju's not to allot shares to investors participating in the rights issue without increasing its authorised share capital. The company was also asked to keep the proceeds of the rights issue in an escrow account to protect investors’ right.
The case is now expected to come up for hearing on July 4.
The investors have also moved a contempt petition against Byju's for violating the tribunal's orders. It maybe noted that the United States-based lenders of Byju's have urged the NCLT to restrain the company from pledging, selling or transferring its shares.
The lenders, who filed the insolvency plea through US-based non-bank loan agency Glas Trust Company LLC, told the tribunal on May 29 that Byju's was borrowing more money and alienating its shares in exchange, thereby “causing grave prejudice to them”.
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