The MCA reportedly clarified in a statement that recent reports claiming Byju's has been cleared of financial fraud in an ongoing investigation are factually incorrect and misleading.
The Ministry of Corporate Affairs, MCA, has denied giving clean chit to embattled edtech firm Byju's, according to a report by Moneycontrol. This comes after a Bloomberg report mentioned that the Ministry did not find any evidence of wrongdoing such as manipulation of financial accounts or siphoning of funds by the edtech firm.
However, the MCA identified governance issues that led to the start-up’s increasing losses, according to the Bloomberg report. The probe did not explicitly state whether Byju Raveendran, the founder of the edtech firm, is personally responsible for these governance lapses or if he is competent to lead the company, adds the report. Several investors have sought the removal of Raveendran as CEO over alleged "mismanagement and failures."
The MCA has, meanwhile, rejected the Bloomberg report and called it misleading. In a statement, the MCA reportedly said, “There have been recent reports claiming that Byju's has been cleared of financial fraud in an ongoing investigation by the Ministry of Corporate Affairs (MCA). It is categorically clarified that such reports are factually incorrect and misleading.”
It further added, "The proceedings initiated by MCA under the Companies Act, 2013, are still ongoing, and no final conclusion should be drawn in this matter at this stage.”
The Bloomberg report published on June 26 reveals that Byju's failed to fully inform all directors about acquisition details. Further, meetings to approve these deals were scheduled with little notice, the report adds. However, the rationale of the founders behind it was justified by pointing out that some directors were investors in competing firms, according to the report.
Byju’s has been grappling with a severe financial crisis, is in battle with several of its investors, and the list goes on. Once valued at $22 billion, the edtech firm is now worth zero, as per HSBC. A note by HSBC says, "We assign zero value to Byju's stake amid multiple legal cases and a funding crunch.”