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regular-article-logo Wednesday, 17 April 2024

Byju's investors call for EGM on February 23 to ouster founder, his family members

The shareholders, who have called the EGM, collectively hold more than 30 per cent stake in Byju's

PTI New Delhi Published 20.02.24, 09:08 PM
Byju Raveendran

Byju Raveendran File photo

Amidst financial turbulence at Byju's, a group of key investors at the edtech have called for an extraordinary general meeting on Friday to oust its founder CEO Byju Raveendran and his family members over "mismanagement and failures" at what was once India's hottest tech startups, sources said.

The shareholders, who have called the EGM, collectively hold more than 30 per cent stake in Byju's.

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Raveendran and family own about 26 per cent in the company.

The sources in the know said the Extraordinary General Meeting (EGM) notice calls for ouster of the current board of Think & Learn, the firm that operates Byju's, composed of Raveendran, his wife and co-founder Divya Gokulnath and his brother Riju Ravindran.

Detailing the reasons for seeking the ouster, the notice listed alleged financial mismanagement, erosion of value due to management's failure to enforce the company's legal rights and concealment of material information.

Earlier this month, South Africa's Prosus, Peak XV Partners (formerly Sequoia Capital), General Atlantic, Sofina, The Chan Zuckerberg Initiative, Owl Ventures, and Sand Capital issued a joint statement seeking change of guard at the company.

"The request for an EGM is supported by a consortium of Think & Learn (T&L) shareholders and follows earlier notices of requisition sent to the T&L board of directors in July and December 2023, which were disregarded...

"The resolutions being put forward for the EGM to consider include a request for the resolution of governance, financial mismanagement and compliance issues; the reconstitution of the board of directors, so that it is no longer controlled by the founders of T&L; and a change in leadership of the company," the investor group had said.

According to the sources, the EGM notice detailing alleged financial mismanagement stated that the company management failed to explain about the show cause notice by Enforcement Directorate (ED) on alleged contraventions, failure to resolve term loan with lenders, conflict with BCCI over sponsorship and Raveendran allegedly misleading shareholders about a term loan.

Other charges include failure to complete the audits, and delay in payment of statutory obligations, including taxes deducted at source, provident fund deductions and contributions.

There is also the allegation of delay in payment of obligations to employees, including final settlement to staff who have left the company.

The notice alleged erosion of value due to management's failure to enforce company's legal rights in order to recover about Rs 1,400 crore of billings and also paying out Rs 300 crore of commission to the firm's affiliated reseller in Dubai.

The management, it goes on to allege, failed to enforce the company's rights against the Blackstone entities and J C Chaudhry to ensure that its entitlement to their Aakash shares is upheld.

It also allegedly failed to disclose Byju's receiving a notice of default from Great Learning in April 2022 and certain litigations.

The sources said the investors want interim CEO be appointed after ouster of the management and reconfiguration of the board of directors. They also want appointment of a chief compliance officer and senior regulatory affairs officer to address compliances and regulatory/government affairs across the group.

Former State Bank India chairman Rajnish Kumar and ex-Infosys CFO Mohandas Pai are part of Byju's board advisory council, which was formed in July last year after the resignation of board representatives from Prosus, Peak XV and Chan Zuckerberg Initiative.

Except for the headline, this story has not been edited by The Telegraph Online staff and has been published from a syndicated feed.

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