Byju’s $200million rights issue on track as NCLT refuses to halt EGM
The Bengaluru Bench of the National Company Law Tribunal (NCLT) on Thursday refused to defer the extraordinary general meeting (EGM) called by the board of edtech major Byju’s to raise the authorised capital for its $200million rights issue.
A group of investors in Byju’s parent, Think & Learn, led by Prosus, had moved the NCLT for a stay on the EGM set for March 29.
The NCLT has listed the case for April 4, when other issues too will be addressed.
The embattled edtech is attempting to raise funds to tide over a liquidity crisis.
NEED FOR EGM
During the hearing, investors claimed that the EGM has been called to increase the authorised capital of the company and to amend the memorandum of association. The investors also argued that once new shares are issued, it cannot be reversed. Hence, they pleaded for a stay on the EGM.
The EGM, to be held on Friday, is essential as the company will need at least 50 per cent votes to increase the share capital.
If it obtains the majority vote, it can issue shares to new investors for the crucial rights issue.
The tribunal also directed Byju’s to share its captable registry sought by investors, which the company said will be made available immediately.
According to the investors, the EGM had been called to defeat the purpose of the NCLT’s order dated February 27.
On February 27, the NCLT directed Byju’s to keep funds received from the rights issue in an escrow account till the disposal of the oppression and mismanagement plea filed by the four investors.
The edtech major had said that its $200million rights issue — at a 99 per cent discount to its peak valuation of $22 billion — has been fully subscribed.
A section of Byju’s investors — MIH Edtech Investments BV, Peak XV Partners Investments, Sofina SA, and General Atlantic Singapore TL Pte Ltd — has filed caveats in the Supreme Court for a hearing before the court decides on a plea that is likely to be filed against the NCLT order.
HC HEARING
In a separate hearing, the Karnataka High Court has extended the interim stay on the outcomes of an EGM called by investors, which included a board change at Byju’s parent firm, Think & Learn. The court will hear the matter on May 28.