Drama On: EGM Calls for Leadership Change, BYJU's Invalidates EGM

The BYJU's drama is not coming to a halt! The war between shareholders and BYJU's founders has taken another dramatic turn as the shareholders have unanimously voted for a leadership change and board revamp.

More than 60% of BYJU's shareholders cast their votes in support of various resolutions to address governance, financial mismanagement, and compliance concerns within the edtech company. The Extraordinary General Meeting (EGM) ended with unanimous agreement on all proposed measures, which involve restructuring the Board of Directors and altering the company's leadership.

You can read more about the BYJU's Boardroom Drama here - BYJU'S EGM Descends into Chaos! Unfolding The Boardroom Drama

BYJU's EGM Resolution

The Extraordinary General Meeting (EGM), called by Byju's shareholders to address the proposed ousting of founder and CEO Byju Raveendran, has concluded. Shareholders convening this EGM included Prosus, General Atlantic, Peak XV, Sofina, Chan Zuckerberg Initiative, Owl Ventures, and Sand Capital Management, representing over 30% of the company's shareholding, as earlier reported by CNBC-TV18.

The voting process, spearheaded by Prosus, concluded around 12:30 pm. Sources within Byju's disclosed to TICE that the meeting was "marred by a series of setbacks." 

A couple of days ago, BYJU's founder Byju Raveendran was also declared absconding, however, some closed sources share with TICE that he's currently staying in Dubai. While exclusively talking to us, he called the EGM invalid. You can read more about it here - EXCLUSIVE: From Dubai, Raveendran dubs Byju’s EGM as Invalid & Illegal

BYJU's Invalidates EGM

However, in a development that has raised serious questions about corporate governance at BYJU'S, the edtech giant has declared resolutions passed during its recent Extraordinary General Meeting (EGM) as invalid and ineffective. The meeting, which saw a notably low turnout primarily consisting of select shareholders, has sparked concerns regarding the legitimacy of decisions made in such circumstances. 

One of the key grounds cited by BYJU'S for deeming the resolutions invalid is the failure to meet quorum requirements as outlined in the company's Articles of Association (AoA). 

BYJU's Statement on EGM

In a press statement, BYJU'S emphasizes that the Honorable Karnataka High Court had granted interim relief, clearly stating that any decisions made during the meeting would not be given effect until the next hearing. This order, coupled with numerous procedural irregularities and deficiencies (set out below), invalidates the resolutions passed by a select, narrow group of shareholders.

"These resolutions were voted upon without the valid constitution of a quorum, as stipulated in BYJU'S Articles of Association (AoA). According to Articles 38 and 39(a) of the AoA, at least one founder-director is required to form a valid quorum. As the founders did not participate in the meeting, the quorum was never legitimately established, rendering the resolutions null and void. This clarity is essential as it has been grossly misrepresented in media of late by various persons," states the recent press statement by BYJU's.

BYJU'S also highlights the improper conduct displayed by the organizers throughout the EGM.

Further the press statement said, "Based on media reports, it appears that the meeting was marred by technical glitches and a failure to follow established procedures. Many shareholders were not allowed to participate in the meeting, were ejected unceremoniously, and were kept waiting for more than 2 hours as the 'roll call' continued. Such violations further underscore the lack of propriety and fairness in the proceedings, raising serious doubts about the validity of any resolutions passed.

Fake Media Narrative

The press statement alleges that statements were being made to the media purport a very different picture, clearly depicting the intent of these select shareholders to make this entire exercise a media spectacle as opposed to following due process. 

"It is also clear from multiple media reports that only around 20% of the number of shareholders - have even attended this farcical EGM. This shows that the wider shareholder group does not support these mala fide actions. The due process required under law was not adhered to, and several of these actions contemplated would cause the Company to materially violate its AoA. A small group of shareholders cannot compel the Company or the Board to violate the AoA, no matter how much media pressure they may apply," it said.

The statement made it clear that the founders of BYJU's maintain that this purported EGM was designed to provoke a trial by the media and is fundamentally devoid of merit, having been bought forward by a select few shareholders as part of a self-serving agenda against the Company and its founders.

In any event, these resolutions merely request the Board to "consider" the recommendations passed at the EGM. They do not have any binding effect whatsoever on the company or its decision-making processes. As such, the resolutions lack the necessary authority to impose any obligations on BYJU'S or its directors, said the statement. 

Lastly, Finally, BYJU'S, the prominent edtech giant, affirmed its unwavering commitment to safeguarding the rights and interests of its shareholders. It asserted "BYJU'S will take all necessary steps to protect the rights and interests of its shareholders, ensuring that decisions made are in accordance with the applicable laws and the provisions laid out in the AoA. The Company and its founders continue to work with shareholders on the ongoing rights issue and business continuity, keeping in mind the company's best interests."

What is BYJU's Controversy?

The Enforcement Directorate (ED) has reportedly issued a notice to edtech giant Byju's, demanding a payment of ₹9,000 crore for purportedly breaching foreign funding regulations. Byju's, however, refutes having received any such communication from the authorities.

To know more about what is happening at BYJU's, watch the video below:

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