MUMBAI: A day after a majority of Byju investors voted to remove founder Byju Raveendran as CEO and restructure the board, which includes his wife Divya Gokulnath and brother Riju Ravindran, the founder wrote a letter to the employee, in which he declared that the extraordinary general meeting (EGM) would be a “farce” and only 35 out of 170 shareholders, representing around 45% of the share capital, voted for the resolution.
“That alone shows the very limited support this irrelevant meeting received. Our shareholders' agreement grants only the board of directors, and not any group of shareholders, the authority to change the composition of the board, the management team and the role of the CEO. Recognizing this, these select few investors have framed their resolution in a way that simply asks the board to consider changes to the current board structure rather than directly ordering them,” Raveendran said in the letter sent to employees on Saturday evening. TOI has verified a copy of the letter.
Investor circles said that shareholders, who together held over 60% of the company's shares, voted for the resolutions. Raveendran said he would “challenge” these illegal and prejudicial actions and assured employees that he would remain CEO, management would remain unchanged and the board would remain the same.
“In other words, it's business as usual at Byju's,” he said, adding that the group of select minority shareholders was careful to “spread misinformation in the media.” “Notwithstanding this uncalled for drama, management is devoting its full attention to the operations of the Company… this order (Karnataka “The Supreme Court's interim order stating that the resolutions of the extraordinary general meeting are invalid until the next hearing), coupled with numerous procedural irregularities and deficiencies, invalidates the resolutions passed by a select, narrow group of shareholders,” Raveendran said.
The CEO reiterated that the decisions taken at the extraordinary general meeting on Friday did not comply with the established rules and therefore do not apply. “The governance of our company is anchored in the Articles of Association and Shareholders Agreement and is further reinforced by applicable corporate law,” said Raveendran. Sources said Byju's is weighing legal options and the company may hold a board meeting on Sunday.
In a statement on Friday, Byju's investor Prosus, which holds a little over 9% stake in the company, said shareholders unanimously approved all resolutions put to the vote. In addition to the change in leadership and the reconstitution of the board, investors were looking for a solution to the outstanding governance, financial mismanagement and compliance issues at Byju's.
The company said investors will submit the outcome of the EGM to the Karnataka High Court. According to the resolutions of the general meeting, investors have proposed a new board structure with nine members – a founder, two executives from the group companies, three shareholders and three independents.
On February 21, the startup managed to get an interim stay from the Karnataka High Court, which issued an interim order stating that any decisions taken by shareholders at the extraordinary general meeting should not take effect until the matter will be heard on March 13th.
Separately, a group of four investors have moved the Bengaluru bench of the National Company Law Tribunal (NCLT) against the company, seeking to declare the promoters “unfit” to run the company, citing oppression and mismanagement. They want the court to order the appointment of a new CEO and board and void the $200 million rights issue. The petition was signed by Prosus, General Atlantic, Sofina and Peak XV Partners, along with support from other shareholders including Tiger Global and Owl Ventures.
“That alone shows the very limited support this irrelevant meeting received. Our shareholders' agreement grants only the board of directors, and not any group of shareholders, the authority to change the composition of the board, the management team and the role of the CEO. Recognizing this, these select few investors have framed their resolution in a way that simply asks the board to consider changes to the current board structure rather than directly ordering them,” Raveendran said in the letter sent to employees on Saturday evening. TOI has verified a copy of the letter.
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Investor circles said that shareholders, who together held over 60% of the company's shares, voted for the resolutions. Raveendran said he would “challenge” these illegal and prejudicial actions and assured employees that he would remain CEO, management would remain unchanged and the board would remain the same.
“In other words, it's business as usual at Byju's,” he said, adding that the group of select minority shareholders was careful to “spread misinformation in the media.” “Notwithstanding this uncalled for drama, management is devoting its full attention to the operations of the Company… this order (Karnataka “The Supreme Court's interim order stating that the resolutions of the extraordinary general meeting are invalid until the next hearing), coupled with numerous procedural irregularities and deficiencies, invalidates the resolutions passed by a select, narrow group of shareholders,” Raveendran said.
The CEO reiterated that the decisions taken at the extraordinary general meeting on Friday did not comply with the established rules and therefore do not apply. “The governance of our company is anchored in the Articles of Association and Shareholders Agreement and is further reinforced by applicable corporate law,” said Raveendran. Sources said Byju's is weighing legal options and the company may hold a board meeting on Sunday.
In a statement on Friday, Byju's investor Prosus, which holds a little over 9% stake in the company, said shareholders unanimously approved all resolutions put to the vote. In addition to the change in leadership and the reconstitution of the board, investors were looking for a solution to the outstanding governance, financial mismanagement and compliance issues at Byju's.
The company said investors will submit the outcome of the EGM to the Karnataka High Court. According to the resolutions of the general meeting, investors have proposed a new board structure with nine members – a founder, two executives from the group companies, three shareholders and three independents.
Expand
Separately, a group of four investors have moved the Bengaluru bench of the National Company Law Tribunal (NCLT) against the company, seeking to declare the promoters “unfit” to run the company, citing oppression and mismanagement. They want the court to order the appointment of a new CEO and board and void the $200 million rights issue. The petition was signed by Prosus, General Atlantic, Sofina and Peak XV Partners, along with support from other shareholders including Tiger Global and Owl Ventures.
