On July 2, the Karnataka High Court overturned a National Company Law Tribunal (NCLT) order that had prevented the troubled edtech company Byju’s from launching a second rights issue. Justice Krishna Kumar announced that the case would be sent back to the NCLT for reconsideration, with a detailed order to be released later.
Investors, including Peak XV Partners, General Atlantic, the Chan-Zuckerberg Initiative, and Prosus, had petitioned the NCLT to stop Byju’s second rights issue, arguing that it would further dilute their shares in the company. While NCLT orders are typically appealed to the National Company Law Appellate Tribunal (NCLAT), Byju’s opted to file a writ in the high court.
On June 12, the Bengaluru bench of the NCLT had instructed Byju’s to maintain the status quo regarding existing shareholders and their holdings. The order prevented Byju’s from proceeding with the second rights issue, which began on May 13 and was set to end on June 13. Furthermore, Byju’s was ordered to keep the funds collected from the rights issue in a separate account and to provide details of the escrow bank accounts from January 29 to date within 10 days from June 12. The company was also required to submit complete details of the allotments made on March 2 before the increase of authorized share capital.