Byju’s Shareholders Seek CEO Ouster Despite Company’s Dispute

Shareholders of the embattled edtech firm Byju’s are making moves to remove its co-founder, Byju Raveendran, and his family from their leadership positions. At an extraordinary general meeting (EGM) held on Friday, shareholders voted unanimously to remove Raveendran from his post as CEO of the company. Among the investors present were tech investor Prosus, global private equity giant General Atlantic, and Facebook founder Mark Zuckerberg’s Chan Zuckerberg Initiative, all of whom are seeking to oust Raveendran, 43, and his family from their roles at the troubled edtech firm.

The shareholders also passed a resolution to address the “outstanding governance, financial mismanagement, and compliance issues at Byju’s.” However, Byju’s parent company, Think & Learn, quickly issued a statement countering the resolutions passed during the EGM. The company stated that the resolutions were “invalid and ineffective” as the founders did not participate in the meeting, and the quorum was not legitimately established, rendering the resolutions null and void.

Raveendran, along with his wife Divya Gokulnath and brother Riju, owns about 23% to 25% of the company, and they boycotted Friday’s meeting. Despite this, Amsterdam-based Prosus issued a statement asserting that the investors present at the EGM unanimously passed all resolutions, including the reconstitution of the board of directors, to remove control from the founders of Think & Learn.

Following the EGM, the Karnataka High Court issued an interim order declaring that the decisions made at the meeting would be subject to a hearing on March 13, as the proper procedure for holding such a meeting had not been followed by the company’s shareholders.

Byju’s has been facing a series of challenges, including delayed financial results, a creditors’ lawsuit, and directors resigning from its board. The company only recently posted its results for the fiscal year ended March 2022, reporting revenues of nearly $700 million and a net loss of more than $1 billion.

In a separate development, a consortium of four investors, including Prosus and General Atlantic, is contesting Byju’s recently concluded $200 million rights issue with the National Company Law Tribunal, alleging “suppression of investor rights and mismanagement.”

Amidst these challenges, the Enforcement Directorate, an Indian government agency investigating money laundering cases, has issued a “lookout” notice barring Raveendran from traveling outside the country. The agency conducted raids on three premises linked to him in April last year as part of an investigation into alleged foreign exchange violations involving nearly 100,000 million rupees ($1,219 million). Byju’s stated that the searches were part of a “routine inquiry” and that it would cooperate with the authorities.

Byju’s current valuation of $200 million represents a significant drop from its peak valuation of $22 billion in July 2022. In January, global private equity investor BlackRock marked down its valuation to $1 billion.

Raveendran’s fortune, which peaked at $3.6 billion in 2022, has plummeted, and his net worth has been wiped out after accounting for money borrowed to support the company. He reportedly pledged his under-construction villa just to pay staff salaries and also vacated 400,000 square feet of office space in Bangalore.