The chief executive officer (CEO) and co-founder of the ed-tech company Bjyu’s, Byju Raveendran wrote a letter to staff members the day after the company’s investors voted for a change in leadership. He described the 23rd February’s extraordinary general meeting (EGM) as a “farce” and stated that he would stay in his position as CEO and management would remain unchanged at the firm.
The development transpired on 24th February after stakeholders sacked him and his kin from the board over charges of “mismanagement and failures.” More than 60% of the stockholders decided to kick out Byju Raveendran and his family members from the company. However, the company declined to accept the decision, claiming that the meeting which was conducted without the founders’ presence was invalid and ineffectual.
Byju Reveendra noted, “I am writing this letter to you as the CEO of our company. Contrary to what you may have read in the media, I continue to remain CEO, the management remains unchanged, and the board remains the same. Put differently, it is ‘business as usual’ at Byju’s. To reemphasise, the rumours of my firing have been greatly exaggerated and highly inaccurate.” He declared that numerous important regulations had been “violated” and rejected the meeting’s decision.
The 44-year-old entrepreneur highlighted, “Just as you can’t change the rules of a game midway without agreement from all players, we can’t alter how our company is run without following these strict guidelines. This means that whatever was decided in that meeting does not count, because it didn’t stick to the established rules. It is crucial for everyone to understand the specific issues that make this EGM a farce.”
Regarding the EGM to be “invalid” Byju Raveendran and his family chose not to be a part of it. The Byju’s boss also pointed out in his email to the staff that a quorum was needed for the investor meeting, and that the quorum required the participation of at least one Founder Director. “To pass any resolution the meeting needs to have a proper quorum, a set of people who are mandatory. Our articles are clear on the quorum requiring the presence of at least one founder director. Consequently, any resolutions taken at the meeting are not enforceable as per law.”
He stated, “The claims made by a small group of select minority shareholders that they have unanimously passed the resolution in the EGM is completely wrong. Only 35 out of 170 shareholders (representing around 45 per cent of shareholding) voted in favour of the resolution. That in itself shows the very limited support that this irrelevant meeting received.” Furthermore, he commented that he is confident that the truth would ultimately come to light despite the “relentless trial by the media.”
He claimed, “Our Shareholder Agreement grants the authority to modify the board’s composition, the management team, and the CEO’s role exclusively to the board, not to a group of shareholders.” He expressed that in recognition of this, the small group of investors has worded their resolution to ask the board to “consider” rather than to really mandate changes to the current board structure.
According to him, the Shareholder Agreement and the Articles of Association, along with the applicable company legislation, serve as the foundation for the business’s governance. In the note, he voiced, “These documents together form the constitutional backbone of our operations, setting out the rules and procedures by which we must abide.”
The EGM passed resolutions that removed founder Byju Raveendran from his position as CEO as well as his brother Riju Raveendran and wife Divya Gokulnath from their respective directorships and management positions. Moreover, the National Company Law Tribunal (NCLT) was petitioned by shareholders led by Prosus accusing the company of mismanagement and oppression.
Raveendran Byju, his wife and his brother, the only three members on the company board as of now stayed away from the meeting that was called by a group of six investors. These investors together own more than 32% of Think & Learn (T&L), the corporation that manages the online tuition platform Byju’s. Sources close to the investors claimed that more than 60% of the shareholders present in the meeting voted in favour of all seven motions, which included firing the current management, reorganizing the board and conducting a third-party forensic inquiry of the company’s purchases. However, sources close to Byju’s estimated the figure at 47%.
According to a statement from Prosus, a well-known international technology investor, the EGM resolutions recommended the resolution of outstanding governance, financial mismanagement, and compliance issues at Byju’s, a reconstitution of the board of directors to boot the founders of Think & Learn from control and a change in the company’s leadership.
In a statement, Prosus, one of the six investors who had summoned the EGM, stated that “shareholders unanimously passed all resolutions put forward for a vote.” Once a household name in the nation for ed-tech, Byju’s is now dealing with several issues, including growing losses, a serious financial shortage and a falling valuation.
However, the decision taken at the EGM will remain on hold as the conduct of the meeting was challenged in court. Raveendran had filed a petition at the Karnataka High Court against the investor’s decision to convene the EGM, and the court will pronounce the verdict on 13 March. The court had declined to stay the meeting.
Meanwhile, Byju Raveendran is probably going to receive a lookout circular (LOC), as requested by the Directorate of Enforcement (ED) to the Bureau of Immigration (BOI). The central agency asked BOI earlier this month to issue a new LOC in an effort to prevent him from leaving the nation.