NCLT Puts Brake On Byju’s Second Rights Issue; Orders Status Quo On Shareholding

India’s National Company Law Tribunal (NCLT) restrained Think & Learn Private Ltd., which runs the edtech startup Byju’s, from proceeding with its second rights issue and also directed to maintain the status quo regarding existing shareholders and their shareholding in the company.

The Bengaluru bench of the NCLT, which was hearing the matter of MIH Edtech Investments B.V. and others versus Think & Learn and others, passed the judgment on 12 June, the tribunal order showed.

The petition filed by Byju’s investors General Atlantic Singapore TL Pte. Ltd. and Sofina S.A. against Think & Learn had urged the NCLT to set aside any actions undertaken by the contesting respondents in violation of the tribunal’s February 2024 order, including allotment of the company’s shares to certain shareholders in March.

The petition also asked the tribunal to set aside any corporate actions taken on the basis of the revised shareholding pattern of the company.

The petitioners filed the application alleging that when the main petition is pending for consideration, Think & Learn once again proposed a second rights issue via an offer letter dated 11 May between 13 May and 13 June period.

The NCLT said when the matter regarding first rights issue is pending before the tribunal for consideration, the subsequent rights issue during the pendency of the company petition comes very much in the purview of NCLT for necessary orders.

Therefore, the tribunal restrains the respondents from going ahead with the present rights issue, it added.

“The respondents are further directed to keep the amounts collected so far since opening of the second rights issue in relation to this offer in a separate account which should not be utilized till the disposal of the main petition,” Judicial Member M.S.S. Sundaram and Technical Member Manoj Kumar Dubey said in the order.

The tribunal also ordered to maintain the status quo with regard to existing shareholders and their shareholding until the disposal of the main petition.

Furthermore, the NCLT directed the respondents to comply with the directions given regarding the details of allotment of shares on 2 March and the details of the escrow banks accounts by filing a compliance affidavit with a memo within 10 days.

The tribunal will hear the matters on 4 July.

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