Byju's Founder and Board Members Skip Ouster EGM Amid Legal Dispute

23 Feb 2024 , 02:26 PM

Think & Learn Pvt Ltd, the parent company of Byju’s, announced that founder and CEO Byju Raveendran and other board members will not attend the extraordinary general meeting (EGM) scheduled by a group of shareholders for the ouster of Raveendran and family members.

Byju’s spokesperson stated that the EGM is deemed procedurally invalid, in contractual contravention of their Articles of Association (AOA) and Shareholders Agreement (SHA), and legally inconsistent with the Companies Act, 2013. Consequently, Raveendran or any other board member will not participate in the EGM.

As Raveendran, his wife, and co-founder Divya Gokulnath, and brother Riju Ravindran collectively own 26% of the company’s shares, investors seeking their removal hold over a 30% stake in the company as of June 2022.

Byju’s had petitioned the Karnataka High Court to prevent shareholders from convening the EGM. Although the court stated that the resolutions’ implementation would await the final hearing on March 13, it allowed investors to proceed with the EGM.

The EGM, slated to commence shortly, will address matters including founder ouster, restrictions on share transfer, and amendments to the shareholder agreement.

Despite Byju’s rights issue being fully subscribed, dissenting investors are poised to undergo substantial dilution if they don’t participate in the issue by February 29.

Investor sources contend that the EGM is legally valid and will proceed as planned, refuting claims that it lacks a quorum without the founders’ attendance.

Byju’s asserts that these dissenting shareholders lack voting rights, emphasizing that the shareholder agreement doesn’t grant them authority over CEO or management changes.

Notable dissenting investors against the company’s management include General Atlantic, Chan Zuckerberg Initiative, Owl Ventures, Peak XV Partners (formerly Sequoia Capital India & SEA), Sands Capital Global Innovation Fund, Sofina, and T Rowe Price Associates.

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