Tracking this evening’s high drama at the Extraordinary General Meeting called by a group of investors who own over 30% stake in crisis-hit ed-tech company Byju’s. The investors are seeking to oust CEO Byju Raveendran and the board. However, the CEO chose to skip the meeting, calling it illegal.
EGM Chaos and Shareholder Action
The Extraordinary General Meeting (EGM) at Byju’s witnessed disruptions and shareholder action, with investors seeking to oust CEO Byju’s Raveendran and the board. Despite key resolutions being put to vote, the founders, Byju Raveendran, and Divya Gokulnath, chose to skip the meeting, citing its illegality.
Byju’s Legal Proceedings and Allegations
Simultaneously, investors have initiated legal proceedings, moving to the National Company Law Tribunal (NCLT) to remove Raveendran as Byju’s CEO and revamp the board. Allegations of governance issues and financial mismanagement have underscored the gravity of the situation, prompting legal action and highlighting concerns over moral propriety.
Complex Agenda and Court Proceedings
The agenda of the EGM encompassed critical decisions, including leadership changes, forensic audits, and board restructuring. However, any resolutions passed remain contingent upon the outcome of legal proceedings, notably the Karnataka High Court hearing scheduled for March 13th. The ongoing legal battle underscores the complexities and stakes involved in the corporate governance crisis at Byju’s.
Legal Recourse for Founders of Byju’s
Founders facing shareholder grievances can seek legal remedies, such as approaching the NCLT or addressing concerns in courts where proceedings are pending. Active participation in meetings and transparent communication are crucial steps to address concerns effectively.
Legality of EGM
While founders argue the EGM’s illegality, governance concerns take precedence over technicalities. Despite procedural discrepancies, the support of 30% of shareholders lends weight to the EGM’s legitimacy.
Importance of Timely Justice
Swift resolution of urgent cases like these is essential, emphasizing the need for courts to prioritize timely justice delivery over prolonged legal battles
Enhanced Governance for Start-ups
Start-ups must prioritize robust governance practices to prevent similar issues in the future. Substance over formality should guide governance norms, particularly for technical founders, to avoid governance vacuums.
Impact of NCLT Proceedings
The outcome of NCLT proceedings could overshadow the EGM’s results, regardless of their outcome. Founder absence during critical discussions may further weaken their position amid ongoing legal scrutiny.
