NCLT relief for Byju’s; EGM to be held today

IN A breather for the Byju’s management, the National Company Law Tribunal (NCLT) on Thursday refused to defer an extraordinary general meeting (EGM) called by the board of directors on Friday to raise the authorised capital to give effect to the $200-million rights issue.

However, the tribunal’s earlier order restraining the company on using the proceeds of the rights issue will continue. As earlier reported, the money needs to be kept in an escrow account. This means Byju’s still cannot use the rights issue money to pay salaries and other expenses. The tribunal has now listed the case for hearing on April 4. A Byju’s spokesperson said that the EGM will be held as planned.

The EGM scheduled for Friday will include a vote on increasing Byju’s authorised share capital which will give effect to the rights issue floated by the company to raise funds to tide over its massive liquidity crisis.

During the hearing, Byju’s claimed that the EGM has been called to increase the authorised capital of the company and also amend the memorandum of association.

According to the investors, the EGM has been called to defeat the purpose of the NCLT’S February 27 order. The investors argued that Byju’s did not permit them to conduct an inspection of the documents to decide on how to vote at the EGM. According to the investors all the shareholders have not been served the notice of the EGM as per law. On its part, Byju’s argued that the investors were provided with an opportunity to conduct the inspection and the notice calling for the EGM has been served on all shareholders.

The NCLT noted that since the case is coming up for hearing on April 4, they do not find any reason to pass an interim order now. At the previous hearing in the NCLT, the investors had argued that the company’s move to call for rights issue was illegal and contrary to law and should be stayed.