Byju’s Founder Byju Raveendran, Co-founder Divya Gokulnath, and Brother Riju Ravindran to Abstain from EGM Despite Owning 26% Shares in the Company.
Byju’s founder and CEO Byju Raveendran has informed shareholders of the troubled edtech company that neither he nor any other board member will participate in the extraordinary general meeting (EGM) convened on February 23 with the intention of ousting the leadership. Raveendran emphasized in a letter sent to shareholders on February 23 that their absence would render the EGM invalid, citing the company’s Articles of Association (AOA) and Shareholder Agreement (SHA), which mandate the presence of at least one founder to establish the quorum for a valid EGM.
In the letter, Raveendran underscored that without the necessary quorum, the EGM would be unable to proceed with discussions or voting on the agenda. He specifically pointed out that if the quorum is not met within half an hour of the scheduled time (i.e., by 9:30 am IST), as stipulated in Clause 39(a) of the AOA and Clause 4.8(a) of the SHA, the EGM cannot commence. Moneycontrol has verified the contents of the letter.
Raveendran, along with his wife and co-founder Divya Gokulnath, and brother Riju Ravindran collectively hold a 26 percent stake in the company. Conversely, investors aiming to remove them from leadership positions held over 30 percent of the company’s stake as of June 2022.
Byju’s had sought legal recourse by filing a petition in the Karnataka High Court to halt the shareholders’ meeting (EGM) from taking place.
Although the court ruled that any resolutions passed during the EGM would be subject to a final hearing scheduled for March 13, it permitted investors to proceed with the meeting.
During the imminent EGM, shareholders will vote on various matters, including the removal of the founder, imposition of restrictions on share transfer, and alterations to the shareholder agreement.
This event unfolds amidst Byju’s ongoing rights issue, aiming to secure $200 million, which has been fully subscribed despite a significant valuation reduction of 99%. Those investors dissenting against the company’s management face the prospect of substantial dilution if they fail to participate in the issue before February 29.
In a letter addressed to shareholders, the founder reiterated his stance that the EGM is “procedurally invalid” and highlighted that Byju’s legal team has corresponded with shareholders regarding this matter.
Expressing confidence in a favorable outcome, the founder criticized dissenting investors for assuming multiple roles within the company’s affairs and assured shareholders of an optimistic resolution.
Notable among the dissenting investors are General Atlantic, Chan Zuckerberg Initiative, Owl Ventures, Peak XV Partners (formerly Sequoia Capital India & SEA), Sands Capital Global Innovation Fund, Sofina, and T Rowe Price Associates.