Byju’s, the troubled edtech behemoth, is seeing a ray of optimism in its battle against a cash constraint. The NCLT has granted the firm permission to hold a vital EGM on March 29. The EGM seeks to enhance Byju’s authorized share capital, which is required for its $200 million rights offering.
Byju’s, the ailing edtech giant, has taken a step closer to resolving its liquidity issues after the National Company Law Tribunal (NCLT) refused to postpone an extraordinary general meeting (EGM) called by the company’s board. According to Moneycontrol, the EGM on March 29 aims to expand Byju’s approved share capital, clearing the way for a vital $200 million rights offering.
While the NCLT has scheduled a hearing for April 4 to address other relevant problems, the tribunal’s decision to allow the EGM to proceed gives Byju’s a window of opportunity to gather the much-needed funds to alleviate its liquidity crunch situation, according to the article.
According to the report, investors objected during the hearing, saying that the EGM was being called in order to get around the NCLT’s earlier order from February 27. That order instructed Byju’s to hold the proceeds of the rights issue in an escrow account until the four investors’ oppression and mismanagement plea was resolved.
Furthermore, investors claimed that they were denied the right to inspect documents before voting at the EGM, and that not all shareholders received the required notice. However, Byju’s claimed that investors were given the opportunity to inspect the EGM notification and that it was properly sent to all shareholders, according to the article.
As early as 19 February 2024, shareholders Prosus, General Atlantic, and Peak XV forced Byju Raveendran and his family out of the board of directors of Byju‘s after an EGM was arranged. Being the one among a number of measures taken to make Byju’s government, Finance management, and Compliance sounder, and rearranging the company’s leadership was the second decision in a series of such decisions.
The NCLT, in its view, was of the opinion that the Company had already fixed a hearing scheduled for 4th April 2017, hence, there was no need to issue any preliminary order to allow the EGM to take place.
Byju’s will stand a fair chance of making use of the funds from the preferential offer to ease its liquidity blues, which have been swaying its market value and come with the rough-and-tumble of the court. But these will be resolved if the shareholders approve the increase of the company’s share capital during the EGM.
Even though NCLT’s verdict may be a temporary relief, investors who own several shares of the company and have over the past year opposed its controversial format and demanded a halt of all legal procedures providing a problem for Byju’s. The time the company will receive the hearing took place on April 4 is to have a profound influence on both the company getting the right amount of funds and dealing with its financial, if the outcome is positive.
