EGM to remove Byju from Byju’s on Friday

Come Friday and the preparation for playing Hamlet without the Prince of Denmark is supposed to begin. The shareholders of Think & Learn – Byju’s parent company – are supposed to get together for an extraordinary meeting to throw out Byju Raveendran and his associates from the company that he founded and which even bears his name.

The move to get rid of Raveendran, his wife and his brother began a few weeks ago. It was reported in early February that a section of shareholders have asked the company secretary to convene an EGM to vote for the ouster of the three, following grave financial condition of the company and the fast downhill ride of the company that earned mammoth publicity for being the biggest edtech venture in the world.

Byju Raveendran, his wife Divya Gokulnath and Byju’s brother Riju Ravindran can be removed from the board when the majority votes (50% plus one share) support the resolution for ouster. Obviously, Raveendran and his family who hold 26% stake in the company and are its largest shareholders will oppose the proposal.

According to reports, matters EGM agenda will include a resolution of the outstanding governance, financial mismanagement and compliance issues. It would also feature reconstitution of the board so that it is no longer controlled by the founders which would facilitate change in leadership of the company.

A section of lawyers has indicated that investors could also move the company law tribunal against Byju’s and its board alleging minority shareholder oppression and mismanagement of the company.

It has been reported that the EGM might not be an open-and-shut affair. Rules enjoin that two members should be present at the EGM for necessary quorum. In this instance, articles of association stipulate the presence of its promoter-director at the EGM. In case the concerned person does not appear, the meeting can be rescheduled after a week. However, if the promoter-director does not turn up even at the adjourned meeting, the shareholders present at the meeting can form the quorum.

On the other hand, the group of agitated investors, who have asked for the EGM control more than 25% stake in Byju’s. However, having earlier signed shareholder agreement without voting rights, they don’t have voting rights and therefore, won’t participate in the meeting.

According to a report, three of the aggrieved investors were on the board of the company till last year. But they did not have any right to seats on the board.

Other shareholders own more than 45% in Byju’s, which had employed Lionel Messi as its brand ambassador. An official told The Times of India that all the investors individually have a single-digit stake. This person also revealed that investors don’t need voting rights to call the EGM and that “voting on specific matters is delinked”.

Byju’s has been besieged with problems. It failed to salary to many employees who have left in droves. The firm also failed to pay rents, resulting in the being locked out from many premises.

It could file financial results (for FY21) after a delay of 18 months when it came up with revenue of Rs 2,280 crore and a loss of Rs 4,588 crore. Its auditor Deloitte Haskins & Sells walked out in June 2023 in the midst of a legal battle. The valuation of the firm was also slashed to a mere fraction of the peak valuation of $22 billion in early 2022.

Its exasperated shareholders responded by pressing for the EGM to remove the founders.