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Byju’s faces allegations of violating NCLT orders on rights issue; company denies
Embattled Byju’s is facing allegations from foreign investors about a rights issue. The case has been deferred by NCLT to June 6.
Four investors in beleaguered edtech company Byju’s, namely, Peak XV Partners, General Atlantic, Chan-Zuckerberg Initiative and Prosus, have alleged that the company has ended up using the proceeds from its most recent rights issue and that this was against an order of the National Company Law Tribunal (NCLT). Notably, these investors had filed an “oppression and mismanagement plea” against Byju’s, MoneyControl reports. The case has been deferred till the next hearing on June 6.
They have also alleged that Byju’s had not even deposited the funds it had received via the rights issue before February 27 in the escrow account.
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Another allegation indicated that Byju’s had allotted shares to the participants in the rights issue and that this step had violated the NCLT order to maintain a shareholding status quo.
On its part, Byju’s has indicated that whatever it has done has been as per law and has denied these accusations.
Now, the tribunal is waiting for the investors to file an application or an affidavit as it cannot take any action till that is done. This step will also ensure that their allegations are brought on record. The time frame provided is a week and Byju’s has indicated its response to that will be filed within two weeks of that.
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The rights issue
Byju’s had raised $200 million through a rights issue. However, investors approached NCLT against the founders as well as the rights issue. They say it may lead to a change in the company's shareholding pattern.
Byju’s salary problem
Think and Learn, which owns Byju's brand, has been facing trouble in paying salaries. Now, it has been reported that the company has actually credited partial salaries for the month of March, PTI said quoting sources.
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Also, it has been revealed that CEO Byju Raveendran had raised debt in his personal capacity to pay the staff. The salary expenses for partial payouts (50 to 100%) is estimated to be in the range of ₹25-30 crore. Those at the lower end of the payscales have been paid 100%, it was indicated.
