Karnataka HC refuses to stay Byju's EGM on Feb 23

Byju's had approached the Karnataka High Court seeking a stay on the EGM but the court only gave an interim relief that any resolution passed at the EGM on Friday cannot be implemented before the next court hearing.

Bengaluru: Karnataka High court has ruled that any resolutions proposed in the upcoming Extraordinary General Meeting (EGM) called by Byju’s investors to oust founder Byju Raveendran and his family from the board and leadership will be deemed invalid. Byju’s parent firm Think & Learn Private Limited had filed a petition in the court against the meeting to be held on February 23 by select investors, and until the final hearing and deposition of this petition, all decisions taken in the EGM will not hold merit, the Court has ruled as per the company.

In its petition, filed under Section 9 of The Arbitration and Conciliation Act, 1996, Byju’s had argued that certain investors, including General Atlantic, Chan Zuckerberg Initiative, MIH EdTech Investments, Own Ventures, Peak XV Partners (formerly Sequoia Capital India & SEA), and Sofina, among others, had violated the Articles of Association (AoA), the Shareholders’ Agreement (SHA), and the Companies Act, 2013 by calling for an EGM.

The EGM’s main agenda is to remove Raveendran as the chief executive officer and chairman of Think & Learn, along with his wife Divya Gokulnath and brother Riju Raveendran as directors.

As per the statement, Byjus argued that the EGM doesn’t hold merit and is instead a smokescreen the set of dissenting investors were employing to disrupt the company's management, control, and functioning, by depriving it of urgently needed capital. The embattled edtech firm is seeking to raise $200 million through a rights issue for existing shareholders, which Raveendran has claimed to have already been oversubscribed.

“The company remains confident in its ability to navigate the current challenges and thanks all its shareholders for their overwhelming participation in the ongoing rights issue,” it said.

This marks a significant turn in ongoing crises the edtech startup is facing, including a failure to raise external funds, significant doubts about its corporate governance and financial management. Ever since representatives of some investors exited Byju’s board last year over governance and accounting issues, they have become increasingly vocal about their doubts on its management and lack of transparency.

Byju’s has said that it will appoint two non-executive directors to the board after getting shareholder consent and completing the audit of its FY23 results, which are expected by the end of this quarter.

“This development marks a significant victory for Byju’s, with the court recognising the urgent need to protect the company's interests and uphold the principles established by law,” the company said in a statement.