The National Company Law Tribunal (NCLT) has directed the ed-tech giant BYJU’s to safeguard funds received from its recent rights issue in an escrow account. This decision comes in response to a petition alleging oppression and mismanagement filed against BYJU’s by 4 Investors of the company.
Funds received from the Rights Issue to be kept in a separate account
The NCLT issued an order on February 27, instructing BYJU’S to keep the funds from the rights issue in a separate account until the resolution of the legal dispute. This measure aims to ensure the equitable treatment of all parties involved in the transaction.
Moreover, the NCLT has instructed the company to consider extending the closure date of the rights issue to prevent any prejudice to the petitioners’ rights regarding their entitlement to the shares under the right issue.
Despite these directives, media sources indicate that BYJU’sis intends to proceed with the closing of the right issue by the originally planned date of February 28th, 2024. The company has already received a full commitment for the rights issue, totalling USD 200 million from existing investors.
ALSO READ: BYJUs CEO face removal – NewsStreetAsia
However, the dissenting shareholders of the company have requested the NCLT to ask BYJU’S to contemplate their appeal. Nonetheless, BYJU’S asserts that there is no stay on the rights issue and it will proceed as scheduled.
Next hearings scheduled for April 4
The Authorities are given 2 weeks to file a reply to the petition with further hearings scheduled for April 4. Meanwhile, the company has undertaken not to allocate shares without first increasing its authorized share capital.
This legal battle stems from allegations of oppression and mismanagement leveled against BYJU’s by a group of investors, including Prosus, General Atlantic, Sofina, and Peak XV. These investors argue that the rights issue undervalues the company, thereby diminishing their shareholding.
ALSO READ: India’s Top 10 EdTech Companies – NewsStreetAsia
In another case, the company is facing an insolvency petition from a US-based lender i.e. Glas Trust Company LLC. The NCLT has issued a notice to the BYJU’s to respond to the pleas with a hearing scheduled for April 2024.
