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MUMBAI: The National Company Law Tribunal (NCLT), in an interim order, has directed Byju’s management to keep the funds received as part of the rights issue in a separate escrow account. The court specified that the funds should not be withdrawn until the disposal of the oppression and mismanagement suit filed by investors against the company’s management.The NCLT has also asked the company’s leadership to consider extending the closure date of the rights issue so that “the rights of the petitioners (investors) with regard to the making of an application for shares under their rights entitlement do not get prejudiced.” TOI has reviewed a copy of the order.
Byju’s rights issue is scheduled to close on Wednesday. Sources close to the company stated that there are no plans to extend the date of closure of the issue. Byju’s declined to comment. The firm’s investors, including Prosus, Peak XV Partners, General Atlantic, and Sofina, sought a stay on the rights issue, claiming serious allegations of funds being siphoned off by the company’s promoters and ongoing investigations by the Enforcement Directorate (ED) and Ministry of Corporate Affairs (MCA). Lawyers representing the investors argued that if they do not subscribe to the rights issue, their shareholding will decline from 24.5% to 2.5%. The investors declined to comment.
Byju’s has given an undertaking that no allotment of new shares will be made without increasing the authorized share capital of the company in accordance with the law. The case will next be heard on April 4. The cash-starved company had been banking on its $200 million rights issue to raise capital and meet its current financial liabilities. Byju’s will have to call an EGM (extraordinary general meeting) to seek shareholder approval and increase authorized capital.
The court has also asked regulatory authorities such as the MCA, Reserve Bank of India (RBI), and SEBI to file a reply in response to the petition within two weeks. Through the NCLT petition, the investors are also seeking a declaration that the founders are unfit to run the company and a forensic audit of the firm.
The court has also asked regulatory authorities such as the MCA, Reserve Bank of India (RBI), and SEBI to file a reply in response to the petition within two weeks. Through the NCLT petition, the investors are also seeking a declaration that the founders are unfit to run the company and a forensic audit of the firm.
Separately, on Wednesday, the NCLT has also asked Byju’s to reply within three weeks to the insolvency plea filed by its foreign lenders. The case will be heard in April.
Byju’s is locked in a bitter fight with its investors, the majority of whom voted to oust the CEO and restructure the company’s family-run board. The company claims that only 35 of 170 shareholders, representing around 45% of the shareholding, voted in favor of the resolution passed at last week’s EGM. In a letter to employees, Raveendran said that he remains the CEO of the company and will challenge what he deems as ‘illegal and prejudicial actions’ taken against him.
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