3 April 2024 – The National Company Law Tribunal (NCLT) encountered a deadlock regarding a plea by investors to halt Byju’s rights issue, prompting the referral of the case to the tribunal’s president. With members of the Bengaluru bench at odds, the president is expected to assign a third member from another bench to reconsider the interim application.
Byju’s recent extraordinary general meeting (EGM) on March 29 proceeded smoothly, with resolutions to increase the authorised share capital receiving no objections. However, dissenting investors, including Peak XV Partners, General Atlantic, and Prosus, abstained from participating in the $200 million rights issue despite CEO Byju Raveendran’s invitation.
Before the EGM, investors raised concerns about inadequate access to documents for voting decisions, highlighting alleged violations of shareholder notice requirements. These disputes culminated in an NCLT order directing Byju’s to withhold funds from the rights issue pending the resolution of an oppression and mismanagement plea from the dissenting investors.
The tribunal’s intervention has hindered Byju’s ability to utilize the raised funds, leading to delays in employee salary disbursements for two consecutive months. Raveendran expressed frustration over the situation, emphasizing the company’s financial constraints resulting from the NCLT order.