Byju’s Investors File Suit Against Management; Seek Board Overhaul

23 Feb 2024 , 03:19 PM

Four investors of Byju’s have lodged an oppression & mismanagement suit against the company’s management at the Bengaluru Bench of NCLT, seeking various reliefs including the declaration of founders as unfit to run the firm, appointment of a new board, and a forensic audit, among other measures, according to investor sources.

Simultaneously, investors held an extraordinary general meeting on February 23 to vote on the removal of the founder and his family from the edtech company, with the outcome awaited.

Concerns outlined in the NCLT suit encompass financial mismanagement leading to the loss of control over Aakash, default on Byju’s Alpha (TLB loan), prolonged corporate governance issues, oppressive nature of the $200 million rights offer, regulatory non-compliance, and lack of transparency.

The petition, backed by investors including Prosus, GA, Sofina, and Peak XV, aims to prevent value erosion for shareholders and preserve the interests of employees and customers.

Byju’s had earlier filed a petition to restrain these shareholders from holding the EGM, which the court allowed, subject to final hearing on March 13.

The investors intend to restructure the board to enhance shareholder representation, incorporate independent input, and improve corporate governance.

Byju’s investors propose forming a nine-member board within 30 days, comprising three independent directors nominated by shareholders, three shareholder directors, and two company executive management employees.

Byju’s has faced scrutiny since early 2022 for various issues including accounting irregularities, alleged mis-selling of courses, and mass layoffs, resulting in the departure of investor board members and attempts to address the problems.

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