Byju's investors approach NCLT to remove CEO Byju Raveendran from the board: Report

An extraordinary general meeting (EGM) called by investors of Byju's for the removal of the founder and CEO, Byju Raveendran, has concluded.

The voting is over, and the results are expected in a few hours. However, the Raveendran family has declared this EGM "illegal."

Investors approach NCLT 

A group of four investors have taken legal action against Byju Raveendran, the CEO of the edtech giant Byju's, by filing a petition with the National Company Law Tribunal (NCLT).

The investors, Prosus, General Atlantic, Sofina, and Peak XV Partners, with additional support from Tiger Global and Owl Ventures, are calling for Raveendran's removal from the company's board, citing mismanagement and a lack of capability to lead the company. 

What are investor concerns?

The investors' concerns include accusations of financial mismanagement and suppression of investor rights, particularly concerning a controversial $200 million rights issue. This issue, they argue, was conducted with "oppressive opacity" and without sharing crucial financial information, effectively diluting non-participating investors' shareholdings by 99%.

Besides this, The investors are also seeking a forensic audit of Byju, the appointment of a new board, and the invalidation of the recently concluded rights issue.

They have also raised concerns about the management's failure to enforce the company's rights related to the acquisition of Aakash Institute and the agreement to unfavourable loan terms.

What did Byju say?

Byju's spokesperson said that the company has not received formal notification of the NCLT petition, criticizing the shareholders for creating a "media spectacle" rather than following due process. The company said it will respond according to the law and due process if such a petition has indeed been filed.

Earlier this week, the Karnataka High Court stated that until it delivers a final verdict, any resolution made at the EGM will not be considered valid. Despite this, the investors proceeded with the EGM on Friday. Byju Raveendran, his brother, and his wife, Divya Gokulnath, chose not to attend the meeting.

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