The National Company Law Tribunal on Thursday refused to stay Byju’s extraordinary general meeting (EGM) that will be held today to augment the authorised share capital of the beleaguered edtech company, giving effect to its $200-million rights issue.
If Byju’s obtains a majority vote for its proposal to increase the authorised share capital, it can issue fresh shares to new investors, helping it to raise $200 million through a rights issue at a 99% cut from its peak valuation of $22 billion achieved in 2022.
Existing investors of Think & Learn, Byju’s parent, led by Prosus, had move NCLT Bengaluru to stay the scheduled EGM and block the rights issue fearing a near wipe-out of their investments.
On 20 March, Byju’s had issued a notice to its shareholders for the extraordinary general meeting, scheduling it for 29 March.
“EGM cannot be stayed, there are decisions, but the decision of the EGM can be challenged. We are not going to pass any order on record”, said a bench comprising Justices K Biswal and Manoj Kumar Dubey, posting the matter for final hearing on 4 April.
Sudipto Sarkar, senior counsel for Prosus, argued that “I am not saying that order should be passed, or not. I am only saying the extraordinary general meeting should not be held. The court should hear the matter and decide whether it should go on or not. Kindly adjourn the meeting, not asking to nullify it. Litigants cannot bypass the tribunal and do things on their own. There is no dispute on the facts. The notice invoked cannot stand.”
Sarkar added that the petition cannot be rendered infructuous by one party by holding such EGM. “The rights issues expires on March 29, but voting will go on till April 6, so the purpose of meeting fails. The rights issue is void and cannot be cured by EGM. Voting is not confidential, it is unusual”, he said.
The investors alleged that not all shareholders have been served the EGM notice, in violation of rules. Additionally, they argued, Byju’s did not allow them to inspect the documents to decide on how to vote for the EGM.
Senior advocate K G Raghavan, appearing for Byju’s, insisted that notice for the EGM had been sent to all the investors, and that opportunity was provided for the inspection of the said documents.
“We are only holding this meeting for increasing our authorized capital. We have not set out anything. We are in fact in compliance with the order”, Raghavan said.
In another relief for the Bengaluru-based edtech firm, the Karnataka High Court on Thursday extended the interim stay on the decision of an EGM convened by the company’s investors to sack co-founder and CEO Byju Raveendran, adjourning the matter to 28 May.