Investors in Byju vote to remove Raveendran and reseat the board

MUMBAI: Byju’s investors and management are about to square off against a faction of investors in Think & Learn, the parent company of the ailing edtech firm, as they have voted to remove founder Byju Raveendran from his position as CEO and reorganize the board to include his brother Riju Ravindran and wife Divya Gokulnath.

The statement by Prosus-led investors came only hours after news broke that four investors had petitioned the National Company Law Tribunal’s Bengaluru bench to declare the company’s founders “unfit” to lead it, claiming “oppression and mismanagement”.

They want the tribunal to rule that the $200 million rights issuance is null and unlawful and to install a new CEO and board.
“Prevent value erosion for all shareholders as well as preserve worth for other stakeholders-employees and customers” was the stated purpose of the petition, which was signed by Prosus, General Atlantic, Sofina, and Peak XV Partners and supported by Tiger Global and Owl Ventures, according to investor sources.
“At today’s EGM, every motion submitted to a vote by shareholders was approved by a unanimous vote. Prosus said in a statement on Friday that these included a request for the resolution of the unresolved governance, financial mismanagement, and compliance issues at Byju’s; a reconstitution of the board of directors to remove the founders of T&L (Byju’s parent company) from control; and a change in the company’s leadership. Over 60% of the firm’s stockholders, taken as a whole, voted in favor.

In response, Byju’s declared that the resolutions approved at the EGM—which it said was only attended by a tiny group of chosen shareholders—were void and ineffectual. The motions were put to a vote without the necessary quorum being present, as required under Byju’s Articles of Association (AoA). The resolutions were declared unlawful because the founders were not present at the meeting, which prevented the quorum from being legally constituted. It also said that the founders lacked the required power to impose any duties on Byju or its directors.
It has not received any official notification that a petition has been filed before the NCLT, according to Byju’s. A representative for the business said, “If such a petition has been filed, the company shall respond to the same in accordance with applicable law and due process.”
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The Karnataka High Court issued an interim judgment earlier this week granting the company a brief respite, noting that any decisions made by the shareholders at the EGM should not be given “effect to” until the case is heard on March 13.
“As shareholders and significant 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 HC in line with due process,” Prosus said.

Formerly a rapidly growing startup, Byju’s has lost the confidence of its investors as a result of many financial and corporate governance missteps within the company. Investors are also requesting a forensic audit and a direction to the corporation prohibiting any corporate acts that might jeopardize their rights via the NCLT case.
Investors have raised concerns in their lawsuit regarding the “oppressive nature” of the rights offer, regulatory non-compliance, “oppressive opacity and wilful default” in sharing information with stakeholders, and financial mismanagement by the founders that resulted in the loss of control of its profitable test-prep unit Aakash Educational Services. They have also brought attention to long-standing problems with corporate governance, such as the failure to hire an independent director and CFO and the nonpayment of term loan B.