BUSINESS

“I Stay Chief Executive Officer, Unfounded Reports About My Termination”: Byju Raveendran Letter To Staff

The CEO and founder of the ed-tech company Byju’s, Byju Raveendran, claimed in a letter to staff members the day after the shareholders decided to fire him that “rumors” about his termination from Byju’s are untrue.

The 44-year-old businessman called Friday’s extraordinary general meeting (EGM) of shareholders a “farce” and claimed that rumors of his termination from Byju’s were “greatly exaggerated and highly inaccurate” in a letter to staff members.

In my capacity as our company’s CEO, I am sending you this letter. He remarked, “I remain CEO, management is the same, and the board stays the same, notwithstanding what you may have read in the media.

“It is entirely false that a tiny number of chosen minority shareholders claimed that the resolution at the EGM had been approved by a unanimous vote. Just 35 of the 170 shareholders, or around 45% of the total shareholding, cast votes in favor of the motion. That demonstrates the very little support this pointless meeting had,” Raveendran informed the staff.

He went on, “We can’t change how our company is run without adhering to these strict guidelines, just as you can’t change the rules of a game midway without agreement from all players.”

Due to alleged “mismanagement and failures” at what was once India’s hottest tech startup, Byju’s shareholders unanimously voted on Friday to remove founder CEO Raveendran and his family from the board. However, the company resisted, claiming that the voting conducted without the founders’ presence was invalid and ineffective.

The only three members of the business’s board, founder and CEO Raveendran, his brother, and his wife, did not attend the EGM that was convened by a group of six investors who together own more than 32% of Think & Learn (T&L), the company that runs the online tutoring platform Byju’s.

According to those close to the investors, over 60% of shareholders ultimately voted in favor of all seven resolutions, which called for the dismissal of the present management, a reorganization of the board, and a third-party forensic probe of the company’s acquisitions.

But according to those close to Byju, the percentage is really 47%, as reported by news agency PTI.

According to a statement from Prosus, one of the six investors who had convened the EGM, “shareholders unanimously passed all resolutions put forward for vote.”

“These included a request for the company’s leadership to be changed, the reorganization of the board of directors to remove T&L’s founder from control, and the resolution of the outstanding governance, financial mismanagement, and compliance issues at Byju’s.”

PTI was informed by sources with firsthand knowledge of the situation that the EGM was scheduled to begin at 09:30 on Friday but was postponed for about an hour due to the attendance of around 200 persons, including several Byju workers.

According to them, the investors were only granted entry after thorough verification, and around forty of their representatives entered to cast votes on the resolution that a few of them had proposed.

The results of the EGM vote, however, won’t matter until March 13, when Raveendran’s appeal against the decision to summon the meeting by certain investors is next heard by the Karnataka High Court.

The resolutions voted at the EGM will not take effect until the next hearing date, the High Court said on Wednesday, refusing to halt the proceedings. A quarter of the corporation is owned by Raveendran and his family.

Firmly declaring that the resolutions voted at the recently finished EGM – attended by a tiny cohort of chosen shareholders – are invalid and ineffectual, Byju’s released a statement prior to the announcement of the EGM results. At worst, the rule of law is being challenged by the adoption of the unenforceable resolutions.

Four of the six investors filed an oppression and mismanagement suit against the company’s management on Thursday night, ahead of the EGM. They asked for the appointment of a new board, the declaration of the recently concluded rights issue as void, and a forensic audit of the company’s books. The suit was filed in the Bengaluru bench of the NCLT and sought the declaration of the founders, including CEO Byju Raveendran, as unfit to run the business.

In response to the lawsuit’s filing, a Byju representative said that the business had not been notified in writing of any such petition. According to Indian regulations, there must be appropriate procedure followed while holding an EGM, notifying the NCLT of petitions filed, etc. However, some stockholders would rather create a media circus than adhere to the law.

According to sources, if the petition is accepted, the National Company Law Tribunal (NCLT) would send notifications.

In keeping with due procedure, Prosus said, “As shareholders and major 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.”

Citing the Karnataka High Court judgment, Byju’s said in their statement that the resolutions voted by a limited group of shareholders are unlawful due to many procedural flaws and deficiencies.

The BYJU Articles of Association (AoA) provide that a quorum must be present in order for these motions to be voted on. A legitimate quorum must consist of at least one founder-director, as per Articles 38 and 39(a) of the AoA.

Only around 20% of the shareholders attended this ridiculous EGM, it said, adding that “the quorum was never legitimately established, rendering the resolutions null and void.” The founders did not attend the meeting.

Byju’s spoke of the total number of shareholders, not the percentage of shares they owned in the business.

The statement said, “The founders maintain that this purported EGM is fundamentally devoid of merit, having been brought forward by a select few shareholders as part of a self-serving agenda against the company and its founders, and was designed to provoke a trial by the media.”

Whatever the case, these resolutions only ask that the Board “consider” the proposals that were made at the EGM. They have absolutely no binding impact on the business or its decision-making procedures. Because of this, the resolutions don’t have the right power to bind Byju or its directors in any way.

According to a court document, investors have also requested a forensic assessment of the business in the plea agreement submitted to the NCLT on Thursday night. They wanted to choose a new board and CEO and declare the current administration unsuitable to operate the business. In addition, the plea requests a forensic audit and an order for management to provide information to investors.

According to sources, the request also asks for the recent USD 200 million rights sale to be declared null and invalid as well as a directive that the business should refrain from doing any business measures that might jeopardize investors’ rights.

Prosus, GA, Sofina, and Peak XV are the four investors that have signed the petition. Other shareholders who have supported it include Tiger and Owl Ventures.

In the last year, the edtech business has seen other difficulties, including as the resignation of its auditor, the filing for bankruptcy by lenders against a holding company, and a lawsuit in the US contesting the conditions and payback of a loan.

Byju’s is now valued at USD 200 million in a rights offering, down from its 2022 valuation of USD 22 billion.

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