Byju’s Shareholders Greenlight Rights Issue Amidst Regulatory Hurdles

Byju's secures shareholder approval to increase capital, overcoming regulatory hurdles. Independent scrutinizer validates process. Escrow restrictions persist. Launch of BYJU’S 3.0 imminent, revolutionizing global education. Read for details.

Team TICE and Swati Dayal
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In a significant development for BYJU'S, the leading edtech company announced today that the proposal to increase its authorized share capital has garnered majority approval, as confirmed by an independent scrutinizer's report. The approval, obtained through both a postal ballot and an Extraordinary General Meeting (EGM) held on March 29, 2024, signals a pivotal moment for the company amidst ongoing challenges.

Scrutinizer’s Validation

The voting process, which concluded on April 6, 2024, underwent thorough scrutiny by an independent third party to ensure transparency and fairness. With 55% of the total votes polled in favor, the decision sets the stage for Think & Learn Private Limited, BYJU'S parent company, to proceed with issuing fresh shares and finalizing the rights issue.

BYJU'S Founder and CEO, Byju Raveendran, expressed gratitude to the investors for their unwavering support during this critical phase. Raveendran emphasized the significance of shareholder approval in navigating the multifaceted challenges faced by the company, highlighting their collective commitment to revitalizing growth initiatives.

Why Is Rights Issue Important for Byju's?

The rights issue, aimed at addressing liquidity constraints encompassing unpaid salaries, regulatory dues, and vendor payments, was impeded by legal constraints stemming from adversarial actions by four foreign shareholders. These challenges, which bypassed constructive dialogue in favor of litigation, contributed to delays in resolving crucial financial obligations.

An independent scrutinizer meticulously evaluated the voting process, ensuring compliance with applicable laws and upholding principles of transparency and fairness throughout.

Despite the positive mandate from shareholders, regulatory restrictions hinder BYJU'S from immediate utilization of the proceeds. An interim order issued by the National Company Law Tribunal (NCLT), prompted by a petition from the aforementioned foreign shareholders, mandates the company to hold the received funds in escrow until further notice. The next hearing on the matter is scheduled for April 23, adding uncertainty to the company's immediate financial maneuvers.

Looking ahead, the successful conclusion of the rights issue is poised to catalyze the launch of BYJU’S 3.0, a groundbreaking suite of AI-driven products designed to revolutionize global education by offering hyper-personalized learning experiences. This strategic initiative aligns with BYJU's commitment to innovation and its mission of democratizing access to quality education worldwide.

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