On Friday, a group of investors unanimously voted to oust Raveendran as the CEO of Byju’s and revamp the board, which includes wife and cofounder Divya Gokulnath and brother Riju Ravindran.
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Meanwhile, a group of four investors led by Prosus moved the Bengaluru bench of the National Company Law Tribunal (NCLT), filing a petition over “oppression and mismanagement” of the company and against a planned rights issue.
Read the full text of Raveendran’s note to employees:
Dear Team member,
I am writing this letter to you as the CEO of our Company. Contrary to what you may have read in the media, I continue to remain CEO, the management remains unchanged, and the board remains the same. Put differently, it is “business as usual” at BYJU’S.
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The governance of our company is anchored in the Articles of Association and the Shareholder Agreement, further reinforced by the prevailing company law. These documents collectively form the constitutional backbone of our operations, setting out the rules and procedures by which we must abide. Our company’s governance structures are meticulously crafted and legally binding, ensuring decisions and changes occur within a rigorous legal and procedural framework. They aren’t just suggestions; they are firm rules that everyone in the company, including all shareholders, must follow. Think of it like the game rules that all players must stick to in a board game. Just as you can’t change the rules of a game midway without agreement from all players, we can’t alter how our company is run without following these strict guidelines.
At yesterday’s Extraordinary General Meeting (EGM), a lot of these essential rules were violated. This means that whatever was decided in that meeting does not count, because it didn’t stick to the established rules. Regardless of the relentless trial by the media, I firmly believe that the truth will inevitably prevail. As Mark Twain once said, a lie can travel halfway around the world while the truth is still putting on its shoes.
It is crucial for everyone to understand the specific issues that make this EGM a farce. Let me outline some of the key discrepancies that were observed:
– The meeting was convened without following the proper procedure set out by the law and the Company’s Articles of Association.
– To pass any resolution the meeting needs to have a proper quorum, a set of people who are mandatory. Our Articles are clear on the quorum requiring the presence of at least one Founder Director. Consequently any resolutions taken at the meeting are not enforceable as per law.
– The claims made by a small group of select minority shareholders that they have unanimously passed the resolution in the EGM is completely wrong. Only 35 out of 170 shareholders (representing around 45% of shareholding) voted in favour of the resolution. That in itself shows the very limited support that this irrelevant meeting received.
– Our Shareholder Agreement grants the authority to modify the board’s composition, the management team, and the CEO’s role exclusively to the board, not to a group of shareholders. Recognising this, these few select investors have framed their resolution in a manner that requests the board to merely ‘consider’ changes to the current board structure, rather than directly mandating it. This is evident from the excerpt of the resolution passed in yesterday’s meeting: “RESOLVED THAT the approval of shareholders is hereby accorded for the Company and Board to Consider changes to the current Board structure to …….”. I assure you that, as always, I am dedicated to making decisions that serve the best interests of our company.
Additionally, The Honourable Karnataka High Court had granted interim relief, clearly stating that any decisions made during the meeting would not be given effect until resolution. This order, coupled with numerous procedural irregularities and deficiencies, invalidates the resolutions passed by a select, narrow group of shareholders.
It should be clear from the above and the various news reports, which paint a contradictory picture of the effect of yesterday’s meeting, that these minority shareholders are intent on spreading misinformation in the media. The Company will not stoop to their level and engage in a media war. We are confident that their actions will ultimately fail, and the Company’s position will prevail.
Regardless of this uncalled-for drama, the management is devoting its full attention to the Company’s operations, with our vision for the Company unmarred. The sun will rise again tomorrow, and we will continue our business, undeterred by the rumors and false narratives being circulated. Rest assured that I am not taking any of these allegations lying down and will challenge these illegal and prejudicial actions.
Our rights issue has seen an overwhelming response. In fact, such has been the scale of its success that even those who were sitting on the fence are now rushing to get a piece of the action. This momentum is irreversible, and our comeback is now inevitable.
To reemphasize, the rumours of my firing have been greatly exaggerated and highly inaccurate.
Warm regards,
Byju Raveendran