Embattled edtech major Byju’s has claimed that the resolutions passed during the investors’ extraordinary general meeting (EGM) are “invalid and ineffective”. The company stated that the passing of the “unenforceable resolutions” challenges the rule of law “at worst”. Byju’s highlighted that the resolutions were voted upon without the valid constitution of a quorum as stipulated in the company’s Articles of Association (AoA), requiring at least one founder-director to form a valid quorum.
As the founders did not participate in the meeting, Byju’s stated that “the quorum was never legitimately established, rendering the resolutions null and void”. The EGM was called by select investors to oust co-founder and CEO Byju Raveendran from the company, which is currently facing regulatory hurdles amid a cash crunch. The company also noted “the improper conduct displayed by the organisers throughout the EGM” and highlighted that several shareholders were not allowed to participate in the meeting, raising doubts about the validity of any resolutions passed.
Furthermore, Byju’s mentioned that the due process required under law was not adhered to and that several actions contemplated would cause the company to materially violate its AoA. The company emphasized that a small group of shareholders cannot compel the company or the Board to violate the AoA. The Karnataka High Court has ordered that any resolutions passed in the EGM will not hold ground until the final hearing and disposition of the petition on March 13 filed by Think & Learn Private Ltd, the parent company of Byju’s.
Meanwhile, Byju’s key investors including Prosus, General Atlantic, Sofina, and Peak XV have moved the National Company Law Tribunal (NCLT) over its $200 million rights issue. According to investor sources, the shareholders have cited “suppression of investor rights and mismanagement of the company” in its petition to the tribunal. The company is currently facing legal challenges and regulatory hurdles as the dispute unfolds between the investors and the management.
