Byju’s Asserts: Investors Lack Voting Rights in Attempt to Remove Founder from EdTech Group

After months of internal conflicts, Byju’s, India’s once most valuable startup, and some of its major investors are now openly expressing their grievances. Byju’s declared on Friday that its investors lack the voting rights to initiate leadership changes, responding to a group of shareholders who called for an extraordinary general meeting to oust founder Byju Raveendran and his family from top roles within the edtech group.

In an official statement, Byju’s confirmed its commitment to proceed with a $200 million rights issue, citing positive responses from multiple investors. Simultaneously, Byju’s leadership informed employees that the ongoing rights issue has already secured commitments for “more than 100 percent of the proposed amount.” They blamed investors for exploiting the crisis as an opportunity to conspire against Raveendran’s removal.

The leadership at Byju’s attributed the “artificially induced crisis” by select investors to a “slight delay” in the January payroll. Investors, including Prosus, General Atlantic, Peak XV, and Chan Zuckerberg Initiative, issued a statement on Thursday, seeking resolution of governance, financial mismanagement, and compliance issues, along with a change in leadership.

This marks the third attempt by investors to call an extraordinary general meeting (EGM). The latest request comes after Byju’s reset its valuation to $25 million in the rights issue, essential for its survival.

Byju’s full statement on Friday reads as follows:

Think & Learn Private Limited, the parent company of BYJU’S, expresses regret over statements from a few investors calling for an extraordinary general meeting (EGM) to replace founder and group CEO Byju Raveendran. Despite these circumstances, we emphasize that the shareholder’s agreement does not grant them the right to vote on CEO or management change.

TLPL will proceed with the proposed $200 million rights issue after positive responses from multiple investors. The company appreciates the support received from a wide section of its shareholders.

The criticality of the rights issue has been communicated to all shareholders, with capital being crucial for a successful turnaround. Unfortunately, the standoff with some investors is impacting the company and its employees. Business continuity is paramount, and we will prioritize this in our actions.

Byju Raveendran and his leadership team have navigated TLPL through challenges after three investors left the company’s board last year, triggering a broader crisis. The company, along with the advisory board, has been working with investors to find a constructive way forward.

The company and its leadership have updated the working group on all crucial matters, including ongoing business restructuring, financial position, and audits. TLPL remains on the path of dialogue, even as the founders and the leadership work to meet the company’s mounting obligations, including salary payouts. It’s noteworthy that the company has not received external investor funding for nearly two years, except for the founder infusing over $1 billion, prompting the launch of a rights issue as a quick and equitable way to raise funds.”

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