Majority of Byju’s shareholders vote to remove CEO & family

Majority of Byju’s shareholders on Friday voted unanimously for removing founder CEO Byju Raveendran and his family from the board over alleged “mismanagement and failures” at what was once India’s hottest tech startup, but the company dug in its heels, calling the voting done in absence of founders as invalid and ineffective.

Founder CEO Raveendran Byju, his wife and brother - the only three members on company board as of now - stayed away from the extraordinary general meeting (EGM) called by a group of six investors, who collectively hold more than 32 per cent in Think & Learn (T&L), the firm that operates online tution platform Byju’s.

At the end, more than 60 per cent of the shareholders voted in favour of all the seven resolutions, which included removing the current management, reconfiguration of the board and a third party forensic investigation into acquisitions done by the company.

Prosus - one of the six investors who had called the EGM - in a statement said “shareholders unanimously passed all resolutions put forward for vote.

“These included a request for the resolution of the outstanding governance, financial mismanagement and compliance issues at Byju’s; the reconstitution of the board of directors, so that it is no longer controlled by the founder of T&L; and a change of leadership of the company.”

Sources with direct knowledge of the matter said the EGM was to start at 0930 hours on Friday but was delayed for almost an hour as around 200 people, some of them Byju’s employees, sought to join the virtual meet.

Only after due verification the investors were let in, they said, adding some 40 people representing the investors were allowed in and voted on the resolution moved by some investors.

However, the outcome of the vote at the EGM will not be applicable until March 13, when the Karnataka High Court will next hear Raveendran’s plea challenging the move by certain investors to call the meeting.

The High Court on Wednesday had refused to stay the EGM but stated that any resolution passed shall not be given effect till the next date of hearing. Raveendran and family own 26.3 per cent in the company.

Byju’s in a statement, issued before the EGM results were declared, said it “?rmly declares that the resolutions passed during the recently concluded EGM - attended by a small cohort of select shareholders - are invalid and ineffective. The passing of the unenforceable resolutions challenges the rule of law at worst.”

Ahead of the EGM, four out of the six investors, on Thursday evening filed an oppression and mismanagement suit against the management of the company in the Bengaluru bench of the NCLT, seeking declaring of founders, including CEO Byju Raveendran, as unfit to run the company, appointment of a new board, declaring the just-concluded rights issue as void and a forensic audit of accounts.

A Byju’s spokesperson reacting to the news of suit being filed said the company has not received any formal intimation of any such petition. “Indian regulation stipulates due process for conducting an EGM, intimation of petitions being filed in NCLT, etc. But certain shareholders prefer to manufacture a media spectacle as opposed to following due process.”

Sources said as per the process, the National Company Law Tribunal (NCLT) will issue notices once the petition gets admitted.

“As shareholders and significant investors, we are confident in our position on the validity of the EGM meeting and its decisive outcome, which we will now present to the Karnataka High Court in line with due process,” Prosus said.

Byju’s in its statement cited the Karnataka High Court order and said “coupled with numerous procedural irregularities and deficiencies, invalidates the resolutions passed by a select, narrow group of shareholders.”