NCLT Orders Byju's to Maintain Shareholding Status Quo Amid Controversy 

The NCLT has instructed Byju’s to pause its ‘second rights issue’ and place all funds from the first rights issue in an escrow account.
NCLT Orders Byju's to Maintain Shareholding Status Quo Amid Controversy 

The National Company Law Tribunal (NCLT) issued an order on June 12 directing edtech firm Byju's to maintain the current status of its shareholding, effectively halting its controversial rights issue, as per the Economic Times. Byju’s $200 million rights issue, conducted at a 99 percent discount to its peak valuation of $22 billion, has sparked protests from investors like Peak XV Partners and Prosus. 

The NCLT has instructed Byju’s to pause its ‘second rights issue’ and place all funds from the first rights issue in an escrow account, further complicating the situation for the edtech company. Further, the tribunal has also requested details from Byju’s regarding the recipients of shares from the ‘first rights issue.’ 

Read: Byju’s Hedge Fund Partner Can Sidestep Arrest by Complying with Court Inquiry: Report 

As per Moneycontrol, the tribunal order says, “"This Tribunal hereby restrains the Respondents (Byju's) from going ahead with the present rights issue, which is in progress, till the disposal of the main plea. The respondents are further directed to keep the amounts collected so far since the opening of the second rights issue... in a separate account that should not be utilized till the disposal of the main petition.” 

The matter will be heard again on July 4. The details of the escrow account and the allotment of shares have been reportedly requested by the tribunal from the edtech company. The edtech platform has to file the details in ten days, beginning on June 12. 

Information like the shareholder's name, the equity shares owned on January 27, the entitlement based on the rights offer, the equity shares allocated on March 23, and the equity shares allotted following an increase in authorized share capital must all be included in this. An application submitted by the company's investors, including Peak XV Partners, General Atlantic, Chan-Zuckerberg Initiative, and Prosus, resulted in the order being passed. The edtech platform has been in deep financial trouble. Several of its investors have also filed cases against it, including an insolvency plea. 

Related Stories

No stories found.
logo
Outlook Business & Money
business.outlookindia.com