NCLT asks Byju’s to consider extending rights issue

The court did not stop the closure of the rights issue but asked Byju’s to keep the funds untouched. The next hearing is now scheduled for 4 April.

A person familiar with the company’s thinking, however, said that the 28 February deadline will not be extended as the court only said “consider” and had not made it mandatory.

Prosus NV, Peak XV Partners, General Atlantic, and Sofina SA had collectively filed a petition with the National Company Law Tribunal last week against the rights issue, seeking reprieve citing oppression and mismanagement of the company. 

The four investors collectively hold around 25% stake in the company and had sought interim relief on the grounds of alleged financial mismanagement and siphoning of funds by the management, according to court arguments on 27 February.

The court noted that Byju’s had already given an undertaking to not allot new shares without increasing the authorized share capital of the company, as per the provisions of the law.

It also said that the funds collected through the rights issue will be kept in a separate escrow and will not be used for any purposes and it “should not be withdrawn till the disposal of the matter”, the court said on Wednesday.

The court also expanded the scope of the investigation by asking for written submissions within two weeks from multiple regulatory authorities such as the markets regulator Sebi, Reserve Bank of India, Ministry of Corporate Affairs and the Registrar of Companies.

The company did not immediately respond to a request for comment.

Byju’s desperately needs the money from the rights issue–which it said has been fully subscribed–to tide over its liquidity crisis, oversee current liabilities, and repay some of its vendors and debtors. It now needs to call an EGM within 30 days and secure 51% of the votes to expand the authorised share capital of the company.

Mint reported on Tuesday that top investors in Think and Learn Pvt. Ltd, the parent company of Byju’s, who have moved the court to stay the rights issue are likely to skip participating in the edtech firm’s $200-million rights.

Separately, on Wednesday, the court also issued a notice to Byju’s on its lenders’ petition to invoke insolvency to repay around $1.2 billion worth of loans that the company had raised first in November 2021. Its lenders have accelerated the repayment of the $1.2 billion loan, which Byju’s is contesting.

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Published: 28 Feb 2024, 07:32 PM IST