Resolutions At Upcoming Byju's EGM Ineffective Till Next Hearing: Karnataka High Court
The company pled that the EGM was 'devoid of merit' and put forward to disrupt the ongoing rights issue.
The Karnataka High Court on Wednesday issued a ruling in response to a petition filed by Byju's parent, Think & Learn Pvt., deeming any resolutions proposed for the extraordinary general meeting on Feb. 23 as ineffective until the next hearing.
The court heard arguments and stated that the dispute between the petitioner and respondents is arbitrable due to a valid arbitration agreement. Byju's contended that the EGM, initiated by the respondents, didn't follow the procedures outlined in the Companies Act, 2013.
The next hearing date is scheduled for March 13.
In its petition, Byju's said the reasons for the EGM, including the removal of Byju Raveendran as chief executive officer and chairman, as well as Divya Gokulnath and Riju Raveendran as directors, were merely a "smokescreen designed to disrupt the management, control, and functioning of the company".
The company pled that the EGM was "devoid of merit" and put forward to disrupt the ongoing rights issue.
The Bengaluru-based erstwhile unicorn filed the petition under Section 9 of The Arbitration and Conciliation Act, 1996, arguing that certain investors, including General Atlantic, Chan Zuckerberg Initiative, Peak XV Partners, Sofina, and T. Rowe Price Associates had violated the Articles of Association, the Shareholders’ Agreement, and the Companies Act, 2013, by calling for the EGM.
"The company remains confident in its ability to navigate the current challenges and thanks all its shareholders for their overwhelming participation in the ongoing rights issue," it added.
According to investors who spoke on the condition of anonymity, the court's order doesn't declare the EGM illegal or invalidate its resolutions. They maintained that investors will remain in favour of voting for the removal of Raveendran as CEO during the EGM.
The order is the latest in a series of rifts between Byju's and its investors. Shareholders led by Prosus had earlier called for the ouster of Byju from the helm and called for the resolution of the outstanding governance, financial mismanagement and compliance issues, alongside a rejig of the family-led board and a change in leadership of the company.
