Embattled edtech platform Byju’s has been accused of using some of the funds that it raised during the rights issue by four of its investors in violation of the National Company Law Tribunal (NCLT) order. However, the company has denied the charges.
The investors have mentioned that Byju’s has not deposited the money it received from the rights issue in the escrow account.
Embattled edtech platform Byju’s has been accused of using some of the funds that it raised during the rights issue by four of its investors in violation of the National Company Law Tribunal (NCLT) order. However, the company has denied the charges.
The hearing of the ‘oppression and mismanagement plea’ by the NCLT has been deferred till June 6. It was supposed to be heard on April 23. A group of investors—Peak XV Partners, General Atlantic, Chan-Zuckerberg Initiative, and Prosus—has accused the ed tech firm of violating the February 27 NCLT order.
The investors have mentioned that Byju’s has not deposited the money it received from the rights issue in the escrow account. As per Investopedia, “escrow is a legal concept describing a financial agreement whereby an asset or money is held by a third party on behalf of two other parties that are in the process of completing a transaction.”
While the court ordered to maintain the status quo of the shareholding pattern, the investors have alleged that Byju’s already allotted the shares to those involved in the rights issue. Byju’s has denied all these allegations and said that everything has been done as per the law.
NCLT Order
In the February 27 order by the NCLT, Byju’s was asked to keep the proceeds of the rights issue in an escrow account. This was done to protect the investor’s interests. Further, the court had asked Byju’s to not allocate the shares to those who would be participating in the rights issue without increasing the authorized share capital.
Byju’s is mounting trouble. On April 20, the company the company paid a part of its March salary to its employees. As per a report by the Economic Times, the company paid only 50 percent of the salary to mid-senior employees. Similarly, the company has not paid all of the February salary as well. The CEO and founder of the company, Byju Raveendran, had to take on personal debt to pay the salaries of its employees.