In Short:
The National Company Law Tribunal directed Byju’s to maintain status quo with existing shareholders and shareholding until the main petition is disposed of. Byju’s was restrained from using proceeds of the second rights issue and was told to deposit them in a separate account. The tribunal also requested complete details of the escrow bank accounts and allotments to be filed within 10 days. Investors like Peak XV Partners, General Atlantic, Chan-Zuckerberg Initiative, and Prosus filed an ‘oppression and mismanagement’ application leading to this order. The case will be heard on July 4.
Byju’s directed to maintain status quo with existing shareholders by NCLT
Hey there, exciting news from the Bengaluru bench of the National Company Law Tribunal (NCLT)! They have given a directive to the popular edtech major Byju’s to maintain status quo with regard to existing shareholders and their shareholding. The tribunal wants to ensure that things stay as they are until the main petition is disposed of.
Keeping things steady
The order, dated June 13, also restricts Byju’s from using the proceeds of the second rights issue. Investors claim that the rights issue began on May 13 and was supposed to end on June 13. The funds from this issue are to be placed in a separate account until the main petition is resolved.
Byju’s has been told to provide detailed information about the escrow bank accounts related to the rights issue which started on January 29. This information must be submitted within 10 days from June 12.
Accountability is key
Furthermore, Byju’s needs to submit complete details of the allotments made on March 2, before the increase in authorized share capital. This includes shareholder names, equity shares held prior to the rights offer, entitlement as per the offer, and shares allotted post the increase in authorized share capital.
What led to this?
The NCLT acted on an ‘oppression and mismanagement’ application filed by investors like Peak XV Partners, General Atlantic, Chan-Zuckerberg Initiative, and Prosus. The case is scheduled for a hearing on July 4.
Back in February, the tribunal had instructed Byju’s to refrain from allotting shares to rights issue investors without boosting its authorized share capital. They were also asked to safeguard investors’ funds by putting the proceeds of the rights issue in an escrow account.
Stay tuned for more updates on this developing story!
