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MUMBAI: A day after a majority of Byju’s investors voted to remove founder Byju Raveendran as CEO and restructure the board that includes his wife Divya Gokulnath and brother Riju Ravindran, the founder wrote a letter to employees stating that the extraordinary general meeting (EGM) was a “farce” and only 35 of 170 shareholders, representing around 45% of the shareholding voted in favour of the resolution.
“That in itself shows the very limited support that this irrelevant meeting received. Our Shareholder Agreement grants the authority to modify the board’s composition, the management team, and the CEO’s role exclusively to the board, not to a group of shareholders. Recognising this, these few select investors have framed their resolution in a manner that requests the board to merely consider changes to the current board structure, rather than directly mandating it,” Raveendran said in the letter which was sent to employees on Saturday evening. TOI has reviewed a copy of the letter.
Investor sources said that shareholders collectively holding over 60% stake in the firm voted in favour of the resolutions. Raveendran said that he will “challenge” these illegal and prejudicial actions and assured employees that he continues to remain the CEO, the management remains unchanged and the board remains the same.
“Put differently, it is business as usual at Byju’s,” he said, adding that the group of select minority shareholders are intent on “spreading misinformation” in the media. “Regardless of this uncalled-for drama, the management is devoting its full attention to the company’s operations….this order (Karnataka High Court’s interim order stating EGM resolutions to be ineffective until the next hearing), coupled with numerous procedural irregularities and deficiencies, invalidates the resolutions passed by a select, narrow group of shareholders,” Raveendran said.
The CEO reiterated that the decisions taken at the EGM on Friday did not stick to the established rules and therefore they don’t count. “The governance of our company is anchored in the Articles of Association and the Shareholder Agreement, further reinforced by the prevailing company law,” Raveendran said. Sources said that Byju’s is weighing legal options and the company may hold a board meeting on Sunday.
In a statement on Friday, Byju’s investor Prosus which holds a little over 9% stake in the company said that shareholders unanimously passed all resolutions put forward for vote. Apart from the change in leadership and reconstitution of the board, the investors sought resolution of the outstanding governance, financial mismanagement and compliance issues at Byju’s.
The firm said that investors will present the outcome of the EGM to the Karnataka high court. According to the EGM resolutions, the investors have proposed a new board structure comprising nine members—one founder, two executives from within the group companies, three shareholders and three independents.
On February 21, the startup managed to gain a temporary reprieve from the Karnataka High Court which passed an interim order stating that any decisions taken by the shareholders in the EGM should not be given “effect to” until the matter is heard on March 13.
Separately, a group of group of four investors has moved the Bengaluru bench of the National Company Law Tribunal (NCLT) against the company, seeking the declaration of the founders as “unfit” to run the entity, citing oppression and mismanagement. They want the tribunal to order the appointment of a new CEO and board and declare the $200 million rights issue as void. The petition has been signed by Prosus, General Atlantic, Sofina and Peak XV Partners, along with support from other shareholders including Tiger Global and Owl Ventures.
“That in itself shows the very limited support that this irrelevant meeting received. Our Shareholder Agreement grants the authority to modify the board’s composition, the management team, and the CEO’s role exclusively to the board, not to a group of shareholders. Recognising this, these few select investors have framed their resolution in a manner that requests the board to merely consider changes to the current board structure, rather than directly mandating it,” Raveendran said in the letter which was sent to employees on Saturday evening. TOI has reviewed a copy of the letter.
Investor sources said that shareholders collectively holding over 60% stake in the firm voted in favour of the resolutions. Raveendran said that he will “challenge” these illegal and prejudicial actions and assured employees that he continues to remain the CEO, the management remains unchanged and the board remains the same.
“Put differently, it is business as usual at Byju’s,” he said, adding that the group of select minority shareholders are intent on “spreading misinformation” in the media. “Regardless of this uncalled-for drama, the management is devoting its full attention to the company’s operations….this order (Karnataka High Court’s interim order stating EGM resolutions to be ineffective until the next hearing), coupled with numerous procedural irregularities and deficiencies, invalidates the resolutions passed by a select, narrow group of shareholders,” Raveendran said.
The CEO reiterated that the decisions taken at the EGM on Friday did not stick to the established rules and therefore they don’t count. “The governance of our company is anchored in the Articles of Association and the Shareholder Agreement, further reinforced by the prevailing company law,” Raveendran said. Sources said that Byju’s is weighing legal options and the company may hold a board meeting on Sunday.
In a statement on Friday, Byju’s investor Prosus which holds a little over 9% stake in the company said that shareholders unanimously passed all resolutions put forward for vote. Apart from the change in leadership and reconstitution of the board, the investors sought resolution of the outstanding governance, financial mismanagement and compliance issues at Byju’s.
The firm said that investors will present the outcome of the EGM to the Karnataka high court. According to the EGM resolutions, the investors have proposed a new board structure comprising nine members—one founder, two executives from within the group companies, three shareholders and three independents.
On February 21, the startup managed to gain a temporary reprieve from the Karnataka High Court which passed an interim order stating that any decisions taken by the shareholders in the EGM should not be given “effect to” until the matter is heard on March 13.
Separately, a group of group of four investors has moved the Bengaluru bench of the National Company Law Tribunal (NCLT) against the company, seeking the declaration of the founders as “unfit” to run the entity, citing oppression and mismanagement. They want the tribunal to order the appointment of a new CEO and board and declare the $200 million rights issue as void. The petition has been signed by Prosus, General Atlantic, Sofina and Peak XV Partners, along with support from other shareholders including Tiger Global and Owl Ventures.
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