Byju’s: Investor group accuses Byju’s of violating NCLT order

A group of investors in Byju’s on Tuesday claimed in the National Company Law Tribunal (NCLT) that the edtech firm violated the NCLT’s order preventing it from utilising proceeds from a rights issue and issuing shares to the issue’s subscribers without increasing its authorised share capital.
This group, led by Dutch investor Prosus, is seeking to block the $200 million rights issue and oust Byju’s founder Byju Raveendran as its chief executive. The Bengaluru bench of the NCLT adjourned the case for further hearing on June 6.

During Tuesday’s hiring, the counsel for the investors claimed that the company allotted shares under the rights offer on March 2. The company also did not comply with the tribunal’s February 27 order to keep the offer proceeds in an escrow account and, instead, used the funds, the counsel alleged.

Byju’s counsel contended that its actions were performed in accordance with the law and that it did not violate the order as per his interpretation of it.

Spokespersons for Byju’s and Prosus did not immediately respond to ET’s request for comment.

The tribunal directed the investors to file a fresh application, putting their claims on record. Byju’s can then file its response to the claims.

The edtech company, which is facing an investor revolt and regulatory scrutiny amid a fund crunch and weak demand, had said that its $200 million rights issue had been fully subscribed.

On Monday, ET reported that Byju’s had only paid a part of the March salaries to its employees as of April 20, in yet another delay of these payouts.

Founder and CEO Raveendran has been raising personal debt against his stakes in Byju’s to make salary payments, people in the know told ET.

The company, which was valued at $22 billion at its peak, had also cut thousands of jobs in the past year and a half.

Earlier this month, the startup laid off about 500 stafferslargely at its sales and marketing functions.