NCLT rejects request to postpone Byju’s EGM for capital raise through rights issue

In a recent development, the National Company Law Tribunal (NCLT) has refused to stay the extraordinary general meeting (EGM) called by Byju’s to raise capital through a rights issue. The tribunal has set April 4 as the next date of hearing, providing a breather for the embattled edtech company.

Sources reveal that Byju’s counsels successfully convinced the tribunal judge that the petitioners’ objective was restrictive, leading to the decision to allow the EGM to proceed. The court referenced a Supreme Case judgment to support its conclusion that the only aim of increasing authorised capital for the rights issue does not warrant a stay on the meeting.

Last month, the NCLT had instructed Byju’s to hold funds from the rights issue in an escrow account until the case is resolved. As a result, the company has faced financial constraints, prompting it to have employees work from home and give up office spaces across the country.

Byju’s has taken the step to process partial salaries for February based on available capital outside the rights issue funds. The company plans to pay the remaining balance once the funds from the rights issue are accessible, which they anticipate will be soon.

To navigate the cash crunch, Byju’s has decided to relinquish office spaces as leases expire, retaining only its Bengaluru-based headquarters. The move is part of the company’s cost-saving measures in light of the ongoing financial challenges.

The decision by the NCLT to proceed with the EGM despite objections is a significant development for Byju’s as it seeks to secure funds through the rights issue. The company’s efforts to address the financial constraints by having employees work remotely and reducing office spaces underscore the challenges faced in the current economic environment.