 "K'taka HC grants relief to Byju's; calls resolutions passed in EGM invalid")
The Karnataka High Court, in response to a petition filed by Think & Learn Private Limited (the parent company of Byju’s), has passed an order stating that any resolutions proposed to be passed in the 23rd February extraordinary general meeting (EGM) called by select investors, are invalid until the final hearing and disposition of this petition.
Byju’s said this development marks a significant victory for the edtech firm, with the court recognizing the urgent need to protect the company's interests and uphold the principles established by law.
Byju’s filed the petition under Section 9 of The Arbitration and Conciliation Act, 1996, arguing that certain investors, including General Atlantic, Chan Zuckerberg Initiative, MIH EdTech Investments, Own Ventures, Peak XV Partners (formerly Sequoia Capital India & SEA), SCI Investments, SCHF PV Mauritius, Sands Capital Global Innovation Fund, Sofina, and T. Rowe Price Associates, had violated the Articles of Association (AoA), the Shareholders’ Agreement (SHA), and the Companies Act, 2013 by calling for an EGM on 23 February 2024. Byju’s said that it presented compelling evidence and multiple exhibits to support its case. It sought to prevent these investors from disrupting the company's operations by depriving it of urgently needed capital.
In its petition, Byju’s highlighted that the purported reasons for the EGM, including the removal of Byju Raveendran as CEO and Chairman, as well as Divya Gokulnath and Riju Raveendran as Directors, were merely a smokescreen designed to disrupt the management, control, and functioning of the company. The company firmly argued that the proposed EGM was ‘vexatious’ and devoid of merit. It argued that this was put forward to disrupt the ongoing rights issue which offers all shareholders an equal opportunity to maintain their shareholding in the company via participation. Byju’s emphasized its commitment to providing fair and equal opportunities for all shareholders to participate in the rights issue.
The company said that the court's decision to grant immediate relief to Byju’s by invalidating the resolutions passed by the EGM underscores its recognition of the need to protect the company’s best interests and uphold the principles of corporate governance. The ruling ensures that the company can continue its operations with stability and focus, safeguarding the interests of all stakeholders.
The company said that it remains confident in its ability to navigate the current challenges and thanks all its shareholders for their overwhelming participation in the ongoing rights issue.
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Earlier this month, a consortium of key shareholders, holding over 30 per cent stake in Byju’s, issued a notice to the embattled edtech firm, calling for an extraordinary general meeting (EGM) to address “persistent issues”, including a proposed change of management at the firm.
In accordance with the rights granted to shareholders under the Companies Act, 2013, a notice was issued to Byju’s parent firm, Think & Learn Private Limited (T&L), requesting an EGM to address persistent issues relating to corporate governance, mismanagement, and compliance. This request is supported by a consortium of T&L shareholders and follows earlier notices of requisition sent to the T&L board of directors in July and December 2023.
According to the investor sources, court order allows EGM to go ahead on Friday. Court has not declared EGM as illegal. ??High court has not invalidated the resolutions of the EGM .??Order does not grant stay on EGM as per relief sought by Byjus. EGM would go ahead for a vote to remove Byju as CEO. The court order does not prohibit it in any way. A majority of investors are expected to vote in favour of removal as per sources. "It is Incorrect to say court has invalidated the resolutions," said a source.
According to the investor sources, court order allows EGM to go ahead on Friday. Court has not declared EGM as illegal. ??High court has not invalidated the resolutions of the EGM .??Order does not grant stay on EGM as per relief sought by Byjus. EGM would go ahead for a vote to remove Byju as CEO. The court order does not prohibit it in any way. A majority of investors are expected to vote in favour of removal as per sources. "It is Incorrect to say court has invalidated the resolutions," said a source.