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Shareholders pass resolution to oust Byju Raveendran-led management at EGM EGM
Photo courtesy: wikipedia.org

Shareholders pass resolution to oust Byju Raveendran-led management at EGM

India Blooms news Service | @indiablooms | 24 Feb 2024, 12:04 am

Bengaluru: A consortium of prominent investors including Prosus, General Atlantic, and Peak XV on Friday made the decision to remove Chief Executive Officer (CEO) Byju Raveendran from his position at the helm of the edtech company Byju's, media reported.

Once valued at $22 billion, Byju's was previously a dominant force among Indian unicorns.

According to sources familiar with the matter, investors accounting for nearly 60 percent of Byju's stake voted in favour of the resolutions, reported Moneycontrol.

However, company insiders contested this claim, arguing that those in support of the resolutions only control about 47 percent of the shares, the report said.

Raveendran, his wife, and brother—who constitute the entire board—chose to abstain from extraordinary general meeting (EGM) on Friday, it added.

During the meeting, investors successfully passed resolutions aimed at restructuring the leadership of the troubled educational platform, reshaping the board, and initiating a forensic investigation into alleged breaches of governance, the report said.

"At today’s Extraordinary General Meeting, shareholders unanimously passed all resolutions put forward for vote. These included a request for the resolution of the outstanding governance, financial mismanagement and compliance issues at BYJU’s; the reconstitution of the Board of Directors, so that it is no longer controlled by the founders of T&L; and a change in leadership of the Company," said a spokesperson from Prosus, the investors that led the EGM, according to the Moneycontrol report.

The EGM continued for about four hours and concluded after voting on proposed resolutions, the report said, adding that unknown people allegedly tried to sabotage the meeting.

However, a Karnataka High Court order has halted the enforcement of any decisions made during the EGM until the next hearing scheduled for March 13. This order was issued earlier this week in response to a petition filed by the company against its investors.

The investors said they plan to present their case to the Karnataka High Court.

Moving forward, the investors plan to determine the status of the CEO and CFO for each entity under Byju's, both individually and at the group level, said the Moneycontrol report.

They also aim to establish an interim succession plan, which includes the hiring of a temporary CEO from a third party for the consolidated entity.

Furthermore, the investors have voted to restructure the board of directors to enhance shareholder representation, incorporate independent perspectives, and strengthen corporate governance.

They intend to form a nine-member board within 30 days, with three independent directors nominated by shareholders, three shareholder directors appointed, and two company executive management employees included on the new board.

They will also appoint a chief compliance officer and a senior regulatory affairs official who will report to the new board.

On February 22, Raveendran penned a letter to shareholders asserting that his and the promoters' absence would render the EGM proceedings invalid.

The report said citing sources, resolutions at the meeting needed the majority support of those in attendance to be passed.

Four investors - Prosus, General Atlantic, Sofina, and Peak XV - along with the backing of shareholders including Tiger and Owl Ventures, have filed an "oppression and mismanagement" suit against the promoters, reported Moneycontrol.

They have also appealed to the Bengaluru bench of the National Company Law Tribunal to declare the promoters unfit to manage the company, appoint a new board, nullify the rights issue, and order a forensic audit.

These developments occurred as the company announced that its rights issue, aimed at raising $200 million with a valuation cut of 99 percent, was fully subscribed. "Dissenting investors" risk significant dilution of their stakes if they do not participate in the issue by February 29.

Byju Raveendran, his wife, and co-founder Divya Gokulnath, and his brother Riju Ravindran together hold a 26 percent stake in the company. Investors seeking their removal hold over 30 percent of the company as of June 2022.

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