Edtech firm Byju's says investors have no voting rights on CEO change

Edtech major Think and Learn Pvt Ltd, which operates under the brand name BYJU'S, on Friday said investors have no voting rights on the CEO or management change as per the shareholder's agreement.

At least six BYJU's investors have called for an Extraordinary General Meeting (EGM) to address issues at the edtech major and oust founders from having control over the firm.

"Think & Learn Pvt Ltd has noted with sorrow, statements from a select few investors calling for an EGM to replace founder and group CEO Byju Raveendran. Under these unfortunate circumstances, we would emphasise that the shareholder's agreement does not give them the right to vote on CEO or management change," the company said in a statement.

The investors led by Dutch investment firm Prosus in the EGM notice requested the resolution of the outstanding governance, financial mismanagement and compliance issues and the reconstitution of the Board of Directors.

"The resolutions being put forward for the EGM to consider include a request for the resolution of outstanding governance, financial mismanagement and compliance issues, the reconstitution of the Board of Directors so that it is no longer controlled by the founders of T&L and a change in leadership of the Company," a recent notice to shareholders by the group of investors said.

According to a source, who did not wish to be identified, the notice has been backed by General Atlantic, Peak XV, Sofina, Chan Zuckerberg, Owl, and Sands, who jointly account for around 30 per cent stake in BYJU's.

As per the notice, a consortium of BYJU'S shareholders had in July and December requested the board of directors for the meeting but it was disregarded.

BYJU'S said it will continue with the proposed USD 200 million rights issue after receiving encouraging responses from multiple investors.

"The company is gladdened by the support received by a wide section of its shareholders. The criticality of the rights issue has been shared with all shareholders, with capital being pivotal for a successful turnaround. Unfortunately, the company and our employees are paying the price for a stand-off triggered by some investors," BYJU'S said.

The edtech firm said its leadership has updated the working group on all crucial matters, including ongoing business restructuring, financial position, and audits.

"Byju Raveendran and his leadership team have kept TLPL afloat after three investors left the company's board last year, triggering a broader crisis. The company, along with the advisory board consisting of Rajneesh Kumar and Mohandas Pai, constituted a working group with the investors to find a constructive way forward," the statement said.

BYJU'S said the company has not had any external investor funding for nearly two years apart from the founder infusing over USD 1 billion and this is a reason for it launching a rights issue as a quick and equitable way to raise money.