Byjus Investors Demand Founders Ouster Amid Financial Crisis

Amidst the ongoing financial turmoil at Byju's, a group of key investors have called for an extraordinary general meeting (EGM) on Friday, February 24, 2023, to oust the company's founder and CEO, Byju Raveendran, and his family members from the board. The shareholders, who collectively hold over 30% stake in Byju's, have accused Raveendran and his family of mismanagement and failures that have led to the decline of what was once India's hottest tech startup.

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Reasons for Seeking Ouster

The notice for the EGM cites several reasons for seeking the ouster of the current board of Think & Learn, the firm that operates Byju's. These reasons include alleged financial mismanagement, erosion of value due to management's failure to enforce the company's legal rights, and concealment of material information.

Support from Consortium of Shareholders

The request for an EGM is supported by a consortium of Think & Learn shareholders and follows earlier notices of requisition sent to the T&L board of directors in July and December 2023, which were disregarded. The resolutions being put forward for the EGM include a request for the resolution of governance, financial mismanagement, and compliance issues; the reconstitution of the board of directors, so that it is no longer controlled by the founders of T&L; and a change in leadership of the company.

Allegations of Financial Mismanagement

The EGM notice details several instances of alleged financial mismanagement by the company's management. These include the failure to explain a show cause notice by the Enforcement Directorate (ED) on alleged contraventions, failure to resolve term loans with lenders, conflict with the Board of Control for Cricket in India (BCCI) over sponsorship, and Raveendran allegedly misleading shareholders about a term loan.

Other Charges

Other charges against the management include failure to complete audits, delay in payment of statutory obligations such as taxes deducted at source, provident fund deductions and contributions, and delay in payment of obligations to employees, including final settlement to staff who have left the company.

Erosion of Value and Failure to Enforce Legal Rights

The notice also alleges that the management's failure to enforce the company's legal rights has resulted in the erosion of value. This includes the failure to recover about Rs 1,400 crore of billings and the payment of Rs 300 crore of commission to the firm's affiliated reseller in Dubai. The management is also accused of failing to enforce the company's rights against Blackstone entities and J C Chaudhry to ensure that its entitlement to their Aakash shares is upheld.

Interim CEO and Board Reconfiguration

The investors are seeking the appointment of an interim CEO after the ouster of the current management and the reconfiguration of the board of directors. They also want the appointment of a chief compliance officer and senior regulatory affairs officer to address compliances and regulatory/government affairs across the group.

The EGM called by the investors at Byju's reflects the growing concerns over the company's financial health and management practices. The outcome of the meeting could have significant implications for the future of the edtech giant and its founder, Byju Raveendran.