Karnataka HC sets aside NCLT order on rights issue, sends the matter back to tribunal

The high court also declined the request of the investors’ counsel to suspend the present order by the high court which sets NCLT’S order.
National Company Law Tribunal
National Company Law Tribunal (File photo)

BENGALURU: The Karnataka High Court on Tuesday set aside the National Company Law Tribunal (NCLT) order that had restrained Byju’s from launching a second rights issue.

Think and Learn Pvt Limited (Byju’s) and Byju Raveendran had filed writ petitions against the order of NCLT dated 12 June 2024. The High Court has remanded the matter to the NCLT for fresh consideration within 2 weeks from 4 July 2024.

The high court also declined the request of the investors’ counsel to suspend the present order by the high court which sets NCLT’S order. On June 12, the NCLT Bengaluru told the edtech firm to maintain the status quo with regard to existing shareholders and their shareholding shall be maintained till the disposal of the main petition.

Earlier, four investors including Peak XV Partners and General Atlantic Singapore accused the parent company of Byju’s, Think & Learn for oppression and mismanagement. In April, Byju’s said 55% of its shareholders have approved the vote for an increase in authorized share capital put forth in the form of a postal ballot and the Extraordinary General Meeting (EGM) held on March 29, 2024.

The approval of the EGM proposals paved the way for Think & Learn Private Limited, to issue fresh shares and conclude the rights issue that was aimed at tackling the liquidity crunch, including unpaid salaries, regulatory dues and vendor payments. But investors had requested the NCLT to stop the edtech firm’s second rights issue as they expressed concerns that this would lead to dilution of their ownership in the company.

Last week, the Ministry of Corporate Affairs (MCA) clarified that reports claiming Byju’s has been cleared of financial fraud in an investigation are factually incorrect. It is about a year since MCA initiated the probe on Byju’s.

The ministry had ordered a probe after Byju’s auditor Deloitte Haskins & Sells exited due to delay in the filing of FY22 financial results.

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