The NCLT ruled in favor of Byju’s investors, instructing Aakash Institute to pause a resolution that could dilute their shareholding. This decision follows a petition from Singapore VII Topco I, owned by Blackstone, alleging investor oppression. The next hearing is scheduled for December 19, leaving the future of investor rights and Aakash Institute uncertain.
New Delhi: In a significant development, the National Company Law Tribunal (NCLT) on Wednesday ruled in favor of investors of Byju’s parent company, Think and Learn Private Limited, directing Aakash Institute to halt the implementation of a resolution that could potentially dilute investor shareholding.
“In view of the above and in the interests of justice, this Tribunal directs the Respondents No.1 to 11 not to give effect to the resolutions, if passed, in relation to the Agenda Item No.8 in the Extra Ordinary General Meeting to be held on today i.e. 20.11.2024, till the disposal of the main Petition,”
stated the NCLT order issued by Judicial Member K Biswal and Technical Member Manoj Kumar Dubey.
Agenda Item No.8 pertained to a resolution to amend the Articles of Association (AoA) of Aakash Institute, a move that investors argued would dilute their shareholding. The NCLT has scheduled the next hearing for December 19.
The order came as a result of an oppression and mismanagement petition filed by Singapore VII Topco I, an entity owned by Blackstone, which holds 6.97% shares in Aakash Institute. The petition alleged that investor rights were being systematically oppressed.
Byju’s acquired Aakash Institute in 2021 in a $1 billion deal, marking its largest acquisition to date. Aakash, known for its profitable physical outlets, continued to thrive post-pandemic.
On Monday and Tuesday, Byju’s lenders and investors alleged that the company’s former management was attempting to dilute shareholder rights by amending AoA protections. The petitioners emphasized that “Byju’s would not be worth anything without Aakash Institute.”
The petitioners, represented by Senior Advocates Kapil Sibal and Darius Khambata, argued that the former management of Byju’s colluded with Manipal Education, the majority shareholder in Aakash, to nullify their rights. They contended that shareholders’ rights remain valid irrespective of the status of the Merger Framework Agreement (MFA).
In contrast, Aakash Institute’s legal team, led by Senior Advocates Mukul Rohatgi and Dr. Abhishek Manu Singhvi, argued that the MFA, which allowed for share acquisition, was voided as the merger did not proceed as planned.
This ruling temporarily protects investor rights in Aakash Institute, halting any actions that could dilute their shareholding. With the next hearing set for December, the future of Byju’s investors and its prized asset, Aakash Institute, remains uncertain.
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