In a bizarre development for the once-most valuable startup in India, a group of Byju’s investors decided on Friday to remove Byju’s Raveendran, the founder and CEO of the edtech group, and they also filed a management and oppression lawsuit against the firm’s leadership to stop the recently introduced rights issue.
Investors at EGM
Earlier today, a group of investors, including Prosus Ventures and Peak XV Partners, decided to restructure the startup’s leadership during an Extraordinary General Meeting (EGM). The resolution to reconstitute Byju’s board was also approved by the participating shareholders, whose aggregate ownership in the company exceeded 60%, according to an investor source with knowledge of the situation. (Two individuals close to Byju’s denied that participating stockholders owned more than 60% of the company. Regarding the numbers, neither party has released an official statement.)
Neither Raveendran nor any other board member showed up for the Friday EGM. Byju’s claimed in a statement earlier this month that its shareholders lacked the ability to vote to change the edtech company’s leadership.
The EGM was called by shareholders who collectively own more than 32% of Think & Learn (T&L), the company that runs Byju’s. The High Court refused to postpone the meeting on Wednesday, although any decisions made will not take effect until the next hearing date. Two-thirds of the corporation is owned by Raveendran and his family.
Agendas at EGM
“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.” The EGM was avoided by Raveendran and his family, who deemed it to be “procedurally invalid.”
The results of the EGM vote, however, won’t matter until March 13, when the Karnataka High Court will take up Raveendran’s appeal contesting the decision made by some investors to conduct the EGM.
Byju’s launched a rights offering towards the end of last month, with the goal of raising $200 million at a significantly discounted cost. Earlier this week, Raveendran informed shareholders that the rights issue had received full subscription and urged all current investors to continue investing and holding onto their ownership.
Final Statement
Together, we have established this organization, and I want everyone to be a part of this new mission. Your original investment set us off on our current path, and this rights issue will assist, protect and increase value for all shareholders,” the letter’s author stated. “[..] I am aware that taking part in this rights issue could appear to be a no-brainer. But right now, this is our only practical means of halting irreversible value deterioration.
