In an order on June 12, the National Company Law Tribunal asked the edtech firm to maintain the status quo with regard to existing shareholders.
Edtech platform Byju’s has moved the Karnataka High Court and challenged the order of the National Company Law Tribunal (NCLT). The NCLT’s order restrains the edtech firm from going ahead with its second rights issue. This is as per a report by Moneycontrol.
The plea is likely to come up for hearing today. It was heard on June 18 and 21. The National Company Law Appellate Tribunal (NCLAT) is supposed to hear challenges against the National Company Law Tribunal’s order. However, a writ petition was filed by the edtech firm in the Karnataka High Court.
A writ petition is issued by the Supreme Court under Article 32 of the Constitution and by the High Court under Article 226 of the Constitution. When the fundamental rights of an entity or a person are violated, writ petitions are filed against government actions.
In an order on June 12, the National Company Law Tribunal asked the edtech firm to maintain the status quo with regard to existing shareholders. The order says, “Status quo with regard to existing shareholders and their shareholding shall be maintained till the disposal of the main petition.”
Thus, the funds raised from the $200 million rights issue cannot be used by the edtech platform. The issue will be heard again on July 4.
The investors stated that the second rights issue had started on May 13 and was scheduled to conclude on June 13. The ruling prevented Byju's from proceeding with the issue. Any money that Byju's has already received from the second rights offering is to be deposited into a different account; it is not permitted to use this money.
Also, the complete details of the allotment made before the increase in authorized share capital in March must be filed by the edtech firm. The names of the shareholders and equity shares that have been allotted after the increase in authorized capital must be filed by the edtech firm as per the order.
Byju’s has been facing lots of challenges, including cases filed against the edtech company by its investors, a cash crunch, delays in paying salaries, and others.