This comes after the MCA earlier this week ordered an inspection into the books of Think and Learn Pvt Ltd and Byju’s K3 Education Pvt Ltd, the sources added.
Section 206 of the Companies Act empowers the registrar to call any further information or explanation or any further document relating to the company by written notice. Section 207 (3) (b) empowers the registrar to summon and enforce the attendance of persons and examine them on oath.
“The MCA is of the view that the recent development at the company including its auditor, Deloitte, citing delay in submitting financial statements and three of its board members resigning indicate corporate governance issues at the edtech startup and this requires a detailed probe. Hence, an inspection is ordered. The officer conducting the inquiry will also ask the directors to join the probe in due course of theinvestigation,” said a senior official privy to the developments.
“Once the officer submits a report, the ministry will decide whether a detailed investigation needs to be conducted by the Serious Fraud Investigation Office (SFIO),” the official added.
The SFIO is the investigation arm of the MCA that looks into major cases of fraud. It also has the power to make arrests under Section 447 of the Companies Act.
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Deloitte Haskins & Sells, which was slated to audit Byju’s until 2025, stepped down with “immediate effect” mid-term stating that “the financial statements of the company are long delayed.”Replying to ET’s queries, the company said, “…there have been recent media reports suggesting that the MCA has ordered an inspection of the books and papers of Think & Learn Pvt. Ltd. (“Byju’s”) and of Byju’s K3. However, we are not in a position to confirm the same as the company has not received any communication from the MCA till date in this regard. Thus, there is no question of a summons to its Directors.”
“We would like to point out that your usage of the word inspection and investigation interchangeably in your email, is incorrect. Both these words have very different legal implications. As there is no investigation pertaining to BYJU’S as on date. Hence, no summons can be issued to its officials/ directors. Any inference otherwise, would be highly speculative, defamatory and disparaging and result in irreparable harm to the Company. We request you to re-confirm your report/ understanding as it seems quite improbable,” the email added.
In April, the Directorate of Enforcement (ED) conducted searches on several premises linked to Byju’s, as part of a probe into alleged violation of foreign exchange rules over the investments received and transfer of funds abroad by the edtech startup. In a press release then, the ED said it was cross-checking with banks the genuineness of the figures provided by the company.
According to the ED, its searches revealed that Think & Learn, which runs the Byju’s education platform, had received foreign direct investments of Rs 28,000 crore during 2011 to 2023, when it also remitted around Rs 9,754 crore to various foreign jurisdictions “in the name of overseas direct investment”.
The company had booked around Rs 944 crore in the name of advertisement and marketing expenses, including part of the amount remitted to foreign jurisdiction, it said, adding that these transactions have now been cross-checked.