Byju’s files application with NCLT seeking arbitration over investor dispute

Byju’s has taken a step to resolve its ongoing dispute with investors, and filed an application with the National Company Law Tribunal (NCLT) to seek arbitration for the disagreement, reported Moneycontrol.

The edtech company is asking for arbitration to settle a disagreement with investors regarding the $200 million rights issue.

Byju’s said that their agreement with investors includes a clause for arbitration. However, during a recent hearing, investors like Peak XV Partners, General Atlantic, and Prosus raised new concerns against Byju’s.

Arbitration means settling a dispute outside a courtroom. It involves appointing a neutral person to make a decision that both parties must follow.

They claimed that Byju’s announced the outcome of an important meeting before all votes were counted. They also alleged that Byju’s didn’t follow orders from the tribunal.

These orders included not allowing investors to properly check documents and not increasing the company’s authorised capital before issuing new shares.

However, Byju’s denied these claims. They stated that they would respond to the allegations in an affidavit.

The NCLT has instructed Byju’s to give a formal response to the main complaint. They’ve also asked investors to respond to Byju’s request for arbitration. The next hearing for this case is scheduled for April 23.

The National Company Law Tribunal (NCLT) directed Byju’s on February 27 not to allot shares to investors participating in the rights issue without increasing its authorized share capital.

A month later, Byju’s allowed the investors to inspect its documents.The investors alleged that these two orders were violated.

The investors lodged a plea with the National Company Law Tribunal (NCLT) on April 3, seeking to stop the rights issue before the tribunal president, citing a disagreement among members of its Bengaluru bench.

Byju’s recently held an Extraordinary General Meeting (EGM) on March 29. The purpose was to increase the company’s authorised capital. According to media reports, there were no objections during this meeting.

Before the EGM, Byju’s CEO invited dissenting investors to join a $200 million rights issue within 72 hours. However, none of them took up the offer.

Published On:

Apr 4, 2024

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