Karnataka high court on Wednesday refused to stay an emergency shareholder meeting called by select investors of Think and Learn Pvt Ltd -- the owner of Byju's -- to oust the company's Founder and CEO Byju Raveendran and his family from the leadership in the edtech firm.
Byju's had approached the Karnataka HC seeking a stay on the EGM but the court only gave an interim relief that any resolution passed at the EGM on Friday cannot be implemented before the next court hearing.
"It is further submitted that the conditions for convening the Extraordinary General Meeting (EGM) are not complied and no notice is issued as contemplated under Section 100 (3) of the Companies Act 2013," the court order said.
It further passed an interim order that "the decision, if any taken by the shareholders of the petitioner company in the EGM scheduled on February 23, 2024, shall not be given effect to, till the next date of hearing," the order said.
Select shareholders of Byju's have issued an EGM notice to be held on February 23, demanding a change in leadership of the edtech firm while alleging several anomalies in their functioning.
The notice has been backed by General Atlantic, Peak XV, Sofina, Chan Zuckerberg, Owl, and Sands, who jointly account for about 30 per cent stake in Byju's.
"The Karnataka High Court, in response to a petition by Think & Learn Pvt Ltd (the parent company of Byju's), has passed an order stating that any resolutions proposed to be passed in the 23rd February EGM called by select investors as invalid until the final hearing and disposition of this petition," Byju's said in a statement.
Byju's had filed the petition before the court arguing that certain investors, including General Atlantic, Chan Zuckerberg Initiative, MIH EdTech Investments, Own Ventures, Peak XV Partners (formerly Sequoia Capital India & SEA), SCI Investments, SCHF PV Mauritius, Sands Capital Global Innovation Fund, Sofina, and T Rowe Price Associates, had violated the Articles of Association (AoA), the Shareholders' Agreement (SHA), and the Companies Act, 2013 by calling for an EGM on February 23, 2024.
"The court's decision to grant immediate relief to Byju's by invalidating the resolutions passed by the EGM, underscores its recognition of the need to protect Byju's best interests, and uphold the principles of corporate governance.
"The ruling ensures that the company can continue its operations with stability and focus, safeguarding the interests of all stakeholders," Byju's statement said.
Investor's sources, however, said it is incorrect to say the court has invalidated the resolutions.
The source said the EGM will go ahead for a vote to remove Byju as the CEO.
"EGM to continue -- court order does not prohibit it in any way. Majority of investors are expected to vote in favour of removal of CEO," the source said.
Earlier in the day, Byju in a letter to shareholders, appealed to all investors to participate in the $200 million rights issue floated by the company.
He later shared that the rights issue has been fully subscribed.
