Byju Raveendran.
Credit: Bloomberg Photo
Bengaluru: Investors of the embattled edtech firm Byju’s, on Friday voted to change the company’s leadership effectively removing founder Byju Raveendran from his role as chairman, and his family members from the board of directors.
However, the investors who are also majority shareholders in the company, will have to wait since the Karnataka High Court has said that no decision taken at this extraordinary general meeting (EGM) shall be enforceable till the next hearing on the matter, scheduled for March 13.
Raveedran and his family, who skipped the meeting, maintained that the resolutions passed during the EGM are “invalid and ineffective”, citing the high court hearing earlier this week.
In a statement, Byju’s also said that there were multiple procedural irregularities and deficiencies that invalidate the meeting’s decisions, including the lack of a quorum due to the founders’ absence, which is a requirement according to the company’s Articles of Association (AoA).
Meanwhile, highly placed sources told DH that Over 60 per cent of Byju’s cap table holders voted in favour of all the resolutions tabled during the EGM. They added that Raveendran and his family’s holding is between 23-25 per cent, countering Byju’s assertion that only a select, narrow group of shareholders passed the resolutions.
A group of the company’s investors, including Prosus, General Atlantic, Sofina, and Peak XV, on late on Thursday separately filed an oppression and mismanagement suit against Byju’s at the Bengaluru bench of the National Company Law Tribunal (NCLT), seeking the removal of Byju’s founders, including Raveedran, declaring them unfit to run the company.
The petition also demands reconstituting the board, declaring an ongoing $200 million rights issue void due to its “oppressive nature” and a forensic audit of the company’s financials.
At the EGM, the investors voted in favour of reconstituting the company’s Board of Directors, “so that it is no longer controlled by the founders.” Byju’s board currently includes Raveendran, along with his wife Divya Gokulnath and brother Riju Raveendran, after investor representatives walked out last year.
Voters also agreed to resolve outstanding issues related to governance, financial mismanagement and compliance, which have been a sticking point in the tussle between the Byju’s leadership and investor consortium.
“As shareholders and significant investors, we are confident in our position on the validity of the EGM meeting and its decisive outcome, which we will now present to the Karnataka High Court in line with due process,” Prosus said in a statement.
However, accusing the investors of orchestrating a media trial, Byju’s said the EGM failed to follow due process of the law and the company, making it devoid of any merit.
“In any event, these resolutions merely request the Board to "consider" the recommendations passed at the EGM. They do not have any binding effect whatsoever on the company or its decision-making processes. As such, the resolutions lack the necessary authority to impose any obligations on Byju’s or its directors,” the company said.