Byju’s investors file suit against Byju Raveendran, others for ‘mismanagement and failures’ in NCLT

A group of investors Prosus, GA, Sofina, and Peak XV, along with support from Tiger and Owl Ventures, has filed a suit against Byju Raveendran and the management before the Bengaluru bench of the National Company Law Tribunal (NCLT). They are seeking the declaration of the founders, including CEO Byju Raveendran, as unfit to run the company. They further want a new board to be appointed to the company. The group has also sought the declaration of the recently-concluded rights issue as void. 

Investors are seeking the ouster of Byju Raveendran and family from the board of the company at an extraordinary general meeting (EGM) of shareholders. They are also seeking a forensic audit of the company, as per a court filing.  

These investors want the present management to be declared unfit to run the company. They want a direction to the management to share information with the investors.

The plea also seeks the declaration of the just-concluded $200 million rights issue as void as well as a direction that the company should not take any corporate actions that will prejudice the rights of the investors. The plea has been filed to prevent value erosion for all shareholders as well as preserve the worth for other stakeholders, including employees and customers.

The group raised concerns about financial mismanagement by the founders that led to the loss of control of Aakash, Byju's Alpha (TLB loan) default and prolonged corporate governance issues like not hiring of CFO and an independent director. It also highlighted the “oppressive nature" of the rights offer, regulatory non-compliances, "oppressive, opacity and wilful defaults" in sharing information with stakeholders and unauthorised corporate actions regarding acquisition of Singaporean edtech company Northwest Education Pte.

The plea also mentioned inter-corporate loans on undisclosed terms and multiple insolvency petitions filed by BCCI, TLB lenders and Surfer Technologies Pvt Ltd

Meanwhile, the extraordinary general meeting held by Byju's parent company Think & Learn Pvt. Ltd, investors faced disruptions reportedly caused by a few individuals. These disruptions included alleged sabotage and a delay in starting the meeting due to the time-consuming verification of attendees.