BYJU'S challenges NCLT order barring second rights issue
Ed tech giant BYJU'S has filed a writ petition in the Karnataka High Court, contesting an order from the National Company Law Tribunal (NCLT) that hinders its second rights issue. The plea is set to be heard on Monday. The company has deviated from the usual practice of challenging NCLT orders before the National Company Law Appellate Tribunal (NCLAT), opting instead for the Karnataka High Court.
NCLT order restrains BYJU'S second rights issue
The NCLT order, issued on June 12, directed BYJU'S to maintain the status quo regarding existing shareholders and their shareholding. The court stated, "Status quo with regard to existing shareholders and their shareholding shall be maintained till the disposal of the main petition." This order effectively bars BYJU'S from proceeding with its second rights issue.
Tribunal's instructions to BYJU'S on rights issue proceeds
The NCLT has instructed BYJU'S to deposit any funds collected from the second rights issue into a separate account. The company is also required to provide complete details of the concerned escrow bank accounts from when the right issue opened on January 29 until now. Furthermore, BYJU'S must submit comprehensive details of the allotment made on March 2 before increasing its authorized share capital.
Investors' plea leads to NCLT order against BYJU'S
The NCLT order was issued following an application submitted by company investors including Peak XV Partners, General Atlantic, Chan-Zuckerberg Initiative and Prosus. These investors had filed a plea in the NCLT to halt BYJU'S's second rights issue as it would further dilute their holding in the company. In a previous order on February 27, the NCLT directed BYJU'S not to allot shares to investors participating in the rights issue without increasing its authorized share capital.
