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Byju’s Faces Legal Battle as NCLT Rejects Stay on EGM for $200 Million Rights Issue

Investors’ Concerns Mount as Byju’s Struggles with Financial Challenges

Amidst the crisis facing Byju’s, the National Company Law Tribunal (NCLT) in Bengaluru declined to grant a stay on the scheduled extraordinary general meeting (EGM) of Byju’s on March 29. The EGM was intended to address the proposed increase in the edtech company’s share capital in connection with a $200 million rights issue.

The move to seek a stay on the EGM and block the rights issue was initiated by Byju’s investors, led by Prosus. However, the tribunal dismissed their request for a stay, setting the next hearing for April 4.

Furthermore, the NCLT directed Byju’s to provide all relevant information requested by investors pertaining to the company’s financials, including details regarding the rights issue.

Four major investors of Byju’s—Prosus, General Atlantic, Peak XV Partners, and Sofina—had approached the tribunal seeking a stay on the rights issue.

Previously, the NCLT had instructed Byju’s to keep the funds raised from the rights issue in a separate escrow account and refrain from withdrawing them until the matter was resolved.

Byju’s, once regarded as one of India’s most promising startups, has faced a series of challenges since 2023. These include the resignation of its auditor, initiation of bankruptcy proceedings by lenders against a holding company, and a legal dispute in the US over loan terms and repayment.

This year, investors voted to remove CEO Byju Raveendran citing concerns related to governance, financial management, and compliance. In 2022, Byju’s was valued at $22 billion.

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