Don't want to go Byju's way: Aakash Educational Services to NCLAT

NCLAT refuses to set aside order halting move to amend AoA

Aakash Educational Services told the National Company Law Appellate Tribunal (NCLAT) on Friday that its move to amend Articles of Association (AoA) was aimed at infusing funds by selling equity and save the firm from going “down the path” of Byju’s -- a debt-ridden edtech firm t that owns Aakash.

 

However, the NCLAT did not set aside the National Company Law Tribunal (NCLT) order halting Aakash from amending its AoA and sent the matter back to NCLT.

 

The appellate tribunal has allowed Aakash to move an application before the NCLT for relief and told the NCLT to decide the matter in three weeks from the date of filing of the application. 

 

 

Aakash’s counsel argued before the appellate tribunal that it was vital for their survival and future growth to amend the AoA. 

 

“We don’t want to go down the path of Think and Learn (parent of edtech major Byju’s). We want to stay afloat,” Aakash’s counsel said. He said that the company was not seeking a loan but intended to raise funds by selling more equity. 

 

The amendment to the AoA would help infuse much-needed funds for the company’s survival, he added. 

 

Articles of association outline the rules and regulations that govern a firm’s operations and define its purpose. 

 

The proposed amendments allegedly sought to dilute the rights of minority shareholders, including Singapore VII Topco I Pte Ltd, owned by Blackstone, which holds a 6.97 per cent stake in Aakash. Blackstone had alleged that its rights and interests were being violated.

 

The dispute revolves around proposed amendments to Aakash’s AoA. This was reportedly first raised during an EGM. Minority shareholders, including Blackstone, filed a mismanagement and oppression petition with the NCLT. They claimed the amendments violated their rights under a prior merger framework agreement (MFA).

 

On November 25, Karnataka High Court stayed an NCLT order that barred Aakash from passing a resolution to amend its AoA.

 

The resolution was an attempt to reduce the influence of minority shareholders, the investors had argued. They reportedly accused Byju’s, which has a stake in Aakash, of trying to give a greater say to big investors like Manipal Education.

 

Aakash had challenged the NCLT order in the Karnataka High Court, arguing that the tribunal had failed to provide sufficient reasons for halting the resolution. The High Court granted an interim stay on the NCLT order. However, it clarified that this stay should not be interpreted as a final opinion on the matter.

 

The Supreme Court on November 29 barred Aakash from implementing a resolution to amend its AoA passed at its extraordinary general meeting (EGM). It had sent the matter to NCLAT to be decided. 

 

In 2021, Byju's (Think & Learn) acquired 35-year-old brick-and-mortar coaching centre Aakash for nearly $1 billion in a cash-and-stock deal. However, Byju’s, which was valued at $22 billion in 2022, has seen its fortunes dwindle. This is due to various regulatory issues and disputes with investors, triggering the firm’s insolvency.