## Byju's Shareholder Vote Approves Capital Increase, But Challenges Remain
Edtech giant Byju's has received shareholder approval to increase its authorized share capital, paving the way for a crucial rights issue aimed at addressing its liquidity crunch. The vote, conducted through both an Extraordinary General Meeting (EGM) and a postal ballot, was approved by a majority of 55% of the total votes polled.
This approval allows Byju's parent company, Think & Learn Private Limited, to issue fresh shares and conclude the rights issue. This will provide the company with much-needed capital to tackle outstanding financial obligations, including unpaid salaries, regulatory dues, and vendor payments.
Byju's CEO, Byju Raveendran, expressed gratitude to investors for their support, stating that the approval marks a significant step in the company's turnaround efforts. However, despite the successful rights issue, Byju's is currently unable to utilize the proceeds due to an interim order from the National Company Law Tribunal (NCLT). This order, based on a petition filed by four foreign shareholders, requires the company to hold the funds in an escrow account until the next hearing on April 23rd.
Adding to the company's challenges, Byju's is facing delays in paying employee salaries. A company source indicated that the financial situation may improve once the NCLT releases the rights issue funds from the escrow account.
Meanwhile, Byju's and its investors are engaged in a legal battle at the NCLT over the company's $200 million rights issue. The four investors, Prosus, General Atlantic, Sofina, and Peak XV Partners, are alleging oppression and mismanagement and had sought a stay on the rights issue due to its lower valuation compared to Byju's peak valuation.
Despite these ongoing challenges, the successful rights issue and shareholder approval represent a positive step for Byju's as it seeks to navigate its financial difficulties and implement its ambitious growth plans, including the launch of its AI-powered education products under the "Byju's 3.0" initiative.