NCLT directs Byju’s to maintain status quo, freezes funds raised via second rights issue

The Bengaluru bench of the National Company Law Tribunal (NCLT) has directed the embattled edtech major Byju’s to maintain status quo with regard to existing shareholders and their shareholding.

“Status quo with regard to existing shareholders and their shareholding shall be maintained till the disposal of the main petition,” the order that was made available on June 13 said.

The order restrained Byju’s from using the proceeds of the second rights issue, which, according to the investors, commenced on May 13 and was to end on June 13 and, the same is to be deposited in a separate account till the disposal of the main petition.

“The respondents are further directed to keep the amounts collected so far since opening of the second rights issue in relation to this offer in a separate account which should not be utilised till the disposal of the main petition,” the NCLT order read.

The tribunal directed Byju’s to file the complete details of the escrow bank accounts concerned from the opening of the rights issue on January 29 till date, within 10 days from June 12.

Further, Byju’s must file the complete details of the allotment made on March 2 before the increase of authorised share capital. This must include information such as the name of the shareholder, equity shares held on January 27, entitlement as per rights offer and equity shares allotted on March 23; and also equity shares allotted after the increase in authorised share capital, the order noted.

The order was passed with regard to an ‘oppression and mismanagement’ application filed by the investors of the company such as Peak XV Partners, General Atlantic, Chan-Zuckerberg Initiative and Prosus.

The case is now expected to come up for hearing on July 4.

Perviously, on Feburary 27, the tribunal had directed Byju’s not to allot shares to investors participating in the rights issue without increasing its authorised share capital. The company was also asked to keep the proceeds of the rights issue in an escrow account to protect investors’ rights.