Investors file oppression suit against Byju's CEO Byju Raveendran
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A group of investors, including Prosus, GA, Sofina, and Peak XV, have filed an oppression and mismanagement suit against the management of Byju's, once India's leading ed-tech startup.
The legal action, submitted before the Bengaluru bench of the National Company Law Tribunal (NCLT), aims to declare the founders, including CEO Byju Raveendran, unfit to run the company.
The investors are seeking an overhaul, including appointing a new CEO and board, following allegations of mismanagement and failures within the company. The plea, submitted on Thursday evening, also calls for a forensic audit of Byju's to investigate financial irregularities.
The suit specifically challenges the recently concluded USD 200 million rights issue, seeking to declare it void. The investors aim to prevent any corporate actions that may prejudice the rights of stakeholders, emphasizing concerns about financial mismanagement, defaults, and prolonged corporate governance issues.
Among the grievances outlined in the filing are Byju's loss of control over Aakash, default on the TLB loan, and issues related to corporate governance, such as the non-hiring of a CFO and an independent director. The suit also alleges regulatory non-compliance, the oppressive nature of the rights offered, and a lack of transparency in sharing information with stakeholders.
Furthermore, the legal action highlights unauthorized corporate actions, specifically the acquisition of Singaporean ed-tech company Northwest Education Pte. The investors are also raising concerns about inter-corporate loans on undisclosed terms and multiple insolvency petitions filed by various entities, including BCCI, TLB lenders, and Surfer Technologies Pvt Ltd.
The plea, supported by shareholders Tiger and Owl Ventures, aims to prevent value erosion for all stakeholders and preserve the company's worth for employees and customers. As the legal battle unfolds, it raises questions about the future leadership and strategic direction of Byju's, a company that once stood at the forefront of India's tech startup landscape.