NCLT refuses to stay Byju’s EGM over $200 million rights issue
The EGM will include a vote on increasing Byju's' authorised share capital which will then give effect to the rights issue floated by the company.
The National Company Law Tribunal (NCLT) refused to defer an extraordinary general meeting (EGM) called by the board of directors of Byju’s to raise the authorised capital in order to give effect to the rights issue. The case is now listed for hearing on April 4 while the EGM was scheduled for March 29.
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What we know about Byju's EGM?
The EGM will include a vote on increasing Byju's' authorised share capital which will then give effect to the rights issue floated by the company. This will make the company raise funds as it faces a massive liquidity crisis.
What happened at NCLT hearing?
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Investors said that the EGM has been called to increase the authorised capital of the company and to amend the memorandum of association in the NCLT hearing. Investors also argued that the company's move to call for rights issue was illegal and should be stayed. But the board of directors argued that investors were creating obstructions for the company.
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The tribunal had earlier asked Byju's to keep funds received from the rights issue in an escrow account.
The tribunal had directed Byju's to "consider the extension of the closure date of the right issue so that the rights of the petitioners about the making of applications for shares under their rights entitlement does not get prejudiced".
