Shareholders at Byju’s are poised to vote on Friday regarding a resolution brought forth by certain investors aiming to remove founder CEO Byju Raveendran and his family members due to alleged “mismanagement and failures” at the once-preeminent Indian tech startup. However, the outcome of the vote at the extraordinary general meeting (EGM) won’t take effect until March 13, pending a hearing at the Karnataka High Court where Raveendran is challenging the investors’ move.
The Karnataka High Court declined to halt the EGM, convened by shareholders collectively holding over 32 percent stake in Byju’s, while Raveendran and family hold 26.3 percent. The EGM notice calls for the removal of the current board of Think & Learn, the company operating Byju’s, comprising Raveendran, his wife, co-founder Divya Gokulnath, and his brother Riju Ravindran.
Despite facing financial strain post-pandemic and grappling with setbacks including the recent acquisition of Aakash, Byju’s has seen challenges such as auditor resignations, bankruptcy proceedings initiated by lenders against a holding company, and a US lawsuit contesting loan terms. The company, valued at USD 22 billion in 2022, now stands at USD 200 million in a rights issue.
In an effort to appease investors, Raveendran pledged transparency regarding fund utilization and committed to restructuring the board, including appointing two non-executive directors through mutual consent. Allegations prompting the ouster include financial mismanagement, failure to enforce legal rights resulting in value erosion, and withholding material information from shareholders.
The EGM notice, citing financial mismanagement, points out the management’s failure to address an Enforcement Directorate (ED) show cause notice, unresolved term-loans, conflicts with the BCCI over cricket sponsorship, and alleged shareholder deception regarding a term-loan. Other grievances include audit delays, tardy statutory obligations payments, and delayed employee settlements upon departure. Notably, the EGM notice is backed by major investors like General Atlantic, Peak XV, Sofina, Chan Zuckerberg, Owl, and Sands, holding approximately 30 percent stake in Byju’s.
