NCLT Intervenes to Stay Aakash Educational Services' EGM Resolution on Articles of Association

The National Company Law Tribunal (NCLT) has temporarily halted a resolution concerning changes to the Articles of Association (AoA) of Aakash Educational Services. This decision came after objections from petitioners, including Singapore VII Topco I, who claimed their rights might be compromised. An Extraordinary General Meeting (EGM) was planned for Wednesday to discuss these amendments.

Representative image

Petitioners' Concerns Over AoA Changes

Petitioners, such as Singapore VII Topco I, which holds a 6.97% stake in Aakash Institute, argued that their interests were at risk. They contended that the proposal to remove Part-B of the AoA would strip them of their rights. According to Article 121 of the AoA, shareholders need prior written consent from petitioners before making decisions on Reserved Matters.

Senior advocates Kapil Sibal and Darius Khambata represented the petitioners. They argued that no approval or Reserved Matter Notice was issued for the 65th EGM's agenda on altering the AoA. Consequently, any actions taken regarding Part B's deletion or other AoA changes should be considered invalid.

NCLT's Interim Order and Future Proceedings

In its interim order, NCLT instructed Aakash Educational Services and others not to implement any resolutions related to Agenda Item No. 8 from the EGM scheduled for November 20, 2024. This stay will remain until the main petition is resolved. The Bengaluru bench of NCLT has set December 19, 2024, as the date for the next hearing.

The petition was filed under Sections 241, 242, and 244 of the Companies Act. These sections safeguard minority shareholders' rights. The petitioners sought to prevent Aakash Educational Services from addressing agenda item no. 8 in the EGM, which involved altering the AoA.

Opposition from Aakash Educational Services

Representing Aakash Educational Services were senior advocates Mukul Rohatgi, K.G Raghavan, Abhishek Singhvi, and others. They opposed the petitioners' claims by arguing that essential information about the company's current shareholding pattern was not disclosed by the applicants. They accused the petitioners of withholding crucial documents and not being transparent in their approach.

The tribunal's decision reflects its commitment to ensuring justice while protecting minority shareholders' interests. The upcoming hearing will further address these concerns and determine the future course of action regarding the proposed amendments to Aakash Educational Services' AoA.