[ad_1]
MUMBAI: The National Company Law Tribunal (NCLT) on Thursday refused to stay the extraordinary general meeting (EGM) called by Byju’s on March 29 to increase the authorised share capital required to enable its $200 million rights issue, granting some reprieve to the troubled edtech startup.
Byju’s lawyers argued in court that the “only objective of the petitioners is to be restrictive”.The company would need over 50% of votes to raise the authorised share capital. Four of Byju’s investors who’ve been attempting to block the rights issue since the outset had approached the NCLT, seeking a stay on the EGM.
Byju’s, which is reeling under a cash crunch and has delayed the full disbursement of salaries for Feb for some employees, has been banking on its rights issue to raise capital and meet liabilities. Although the company can go ahead with the EGM, it cannot yet use the funds raised through the rights issue due to a court-approved stay on their usage. Last month, the NCLT in an interim order had directed Byju’s to keep the funds in a separate escrow account while also restraining the firm from withdrawing them until the matter is resolved.
Sources said that once the rights issue is passed with a majority of the participating votes, the issue closes formally and the court is expected to release the escrow. The startup’s investors Prosus, Peak XV Partners, General Atlantic and Sofina had opposed the rights issue. They had stated in their submissions to the NCLT that there are serious allegations of siphoning off of funds by Byju’s promoters and the company is being investigated by the Ministry of Corporate Affairs and the ED.
Byju’s counsels said that the EGM notice has been sent to all shareholders including the opposing investors.
Byju’s lawyers argued in court that the “only objective of the petitioners is to be restrictive”.The company would need over 50% of votes to raise the authorised share capital. Four of Byju’s investors who’ve been attempting to block the rights issue since the outset had approached the NCLT, seeking a stay on the EGM.
Byju’s, which is reeling under a cash crunch and has delayed the full disbursement of salaries for Feb for some employees, has been banking on its rights issue to raise capital and meet liabilities. Although the company can go ahead with the EGM, it cannot yet use the funds raised through the rights issue due to a court-approved stay on their usage. Last month, the NCLT in an interim order had directed Byju’s to keep the funds in a separate escrow account while also restraining the firm from withdrawing them until the matter is resolved.
Sources said that once the rights issue is passed with a majority of the participating votes, the issue closes formally and the court is expected to release the escrow. The startup’s investors Prosus, Peak XV Partners, General Atlantic and Sofina had opposed the rights issue. They had stated in their submissions to the NCLT that there are serious allegations of siphoning off of funds by Byju’s promoters and the company is being investigated by the Ministry of Corporate Affairs and the ED.
Byju’s counsels said that the EGM notice has been sent to all shareholders including the opposing investors.
#NCLT #refuses #stay #Byjus #EGM #rights #issue
