BYJUS Founders Defy EGM Amidst Shareholder Ouster Vote

In a significant development, Think and Learn Private Ltd, the parent company of edtech giant BYJU'S, has announced that neither its founder and CEO Raveendran Byju nor any other board member will attend the extraordinary general meeting (EGM) called by a group of investors.

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Shareholders to Vote on Ousting Founder and Family

The EGM, scheduled for Friday, will see shareholders vote on a resolution brought forward by certain investors seeking to remove founder CEO Byju Raveendran and his family members from their positions due to allegations of mismanagement and failures.

BYJU'S Terms EGM as Procedurally Invalid

BYJU'S has vehemently opposed the EGM, terming it "procedurally invalid" and in violation of the company's articles of association and shareholders agreement. The company spokesperson asserted that Byju Raveendran and other board members will not attend the meeting, which may result in the absence of the required quorum and the inability to proceed with the agenda.

Founders' Responsibility to Protect Company Integrity

Emphasizing the founders' responsibility as custodians of BYJU'S, the spokesperson highlighted their commitment to upholding established legal procedures and safeguarding the company's integrity.

Shareholders' Concerns and Allegations

The EGM has been backed by prominent investors, including General Atlantic, Peak XV, Sofina, Chan Zuckerberg, Owl, and Sands, who collectively hold approximately 30% of the company's shares. These investors have expressed concerns over alleged mismanagement and failures at BYJU'S, once considered India's hottest tech startup.

Outcome of Vote Subject to Court Hearing

However, the outcome of the vote at the EGM will remain inconclusive until March 13, when the Karnataka High Court will hear Raveendran's plea challenging the move by certain investors. The court had earlier declined to stay the EGM, despite Raveendran and his family holding a combined stake of 26.3% in the company.

EGM Seeks Ouster of Current Board

The EGM notice calls for the removal of the current board of Think & Learn, the firm that operates BYJU'S, which includes Raveendran, his wife and co-founder Divya Gokulnath, and his brother Riju Ravindran.

Challenges Faced by BYJU'S

BYJU'S has faced several setbacks in the recent past, including the return of students to physical classes post-pandemic, financial strain due to the acquisition of Aakash, the resignation of its auditor, bankruptcy proceedings initiated by lenders against a holding company, and a US lawsuit disputing loan terms and repayment.

Declining Valuation and Efforts to Appease Investors

BYJU'S valuation has dropped significantly from USD 22 billion in 2022 to USD 200 million in a recent rights issue. In an attempt to appease investors, Raveendran has pledged to enhance transparency in fund utilization and agreed to restructure the board by appointing two non-executive directors with mutual consent.

Allegations of Financial Mismanagement

The EGM notice outlines several allegations against the company's management, including financial mismanagement, erosion of value due to failure to enforce legal rights, and concealment of material information.

Specific Concerns Raised

The notice highlights specific issues such as a show-cause notice from the Enforcement Directorate (ED) for alleged contraventions, unresolved term loans with lenders, conflicts with the BCCI over cricket sponsorship, and misleading statements by Raveendran regarding a term loan.

Additional Charges and Delay in Payments

Other charges include incomplete audits, delayed payments of statutory obligations such as taxes and provident fund deductions, and delayed payments to employees, including final settlements for those who have left the company.

The EGM at BYJU'S has brought to light serious concerns raised by investors regarding the company's management and financial practices. As the company navigates these challenges, the outcome of the EGM and the subsequent court hearing will have significant implications for the future of BYJU'S and its stakeholders.