Byju's, once hailed as a leading unicorn with a valuation of $22 billion, has been embroiled in multiple legal battles. The latest court action comes after Byju's initiated a second rights issue, which the National Company Law Tribunal (NCLT) restrained, maintaining a status quo on the company's shareholders and their holdings until the main petition is resolved.
The QIA's intervention aims to block Raveendran from disposing of any assets, signaling significant concerns over financial mismanagement and governance at the company. This move follows an extraordinary general meeting (EGM) where a significant portion of Byju's investors, holding over 60% of the company, voted to remove Raveendran and his family from the board. The investors, including major stakeholders such as Prosus, General Atlantic, and Peak XV Partners, cited the need for a reconstitution of the board and resolution of governance issues.
Byju’s legal team has filed a writ petition in the Karnataka High Court, challenging the NCLT's decision and opposing the EGM's outcome. The company contends that the EGM was invalid due to a lack of quorum, as stipulated in their Articles of Association, which requires the presence of at least one founder-director.
The internal discord and legal challenges have strained Byju's operations, impacting its ability to secure funds and fulfill financial obligations. This turbulence has also led to scrutiny from various stakeholders, including employees and vendors, who are concerned about the company's financial stability and future.
Industry experts suggest that the continuous legal strife could further erode investor confidence and hinder Byju's efforts to stabilize its operations. The outcome of these legal battles will be crucial in determining the company's ability to navigate its financial and governance challenges.
The Karnataka High Court's upcoming hearings will be pivotal in addressing these issues and setting a course for Byju's future. The legal confrontations, involving high-profile investors and substantial financial stakes, underscore the critical juncture at which the company stands, with its governance and leadership under intense scrutiny.
Sources:
- [Rediff](https://www.rediff.com/business/report/2nd-rights-issue-byjus-moves-ktaka-hc-against-nclt-order/20240624.htm)
- [Telegraph India](https://www.telegraphindia.com/business/plea-in-karnataka-high-court-after-byjus-investors-vote-to-oust-founder-family-from-board/cid/1945224)