NCLT stays Aakash from amending its AoA, halting Byju's alleged attempt to dilute stake

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The National Company Law Tribunal (NCLT) on November 20 blocked Aakash Educational Services from passing a resolution to amend its Articles of Association (AoA), a move that prevents Byju's alleged attempt to dilute its stake in the firm.

The interim order, passed by the tribunal on November 20, stops any changes to Aakash’s governance structure until the tribunal issues a final decision in the ongoing legal dispute, the order notes.

The decision follows allegations from Byju’s lenders, including Blackstone-backed Singapore Topco, which Byju management, including founder Byju Raveendran, were seeking to reduce the edtech's stake to benefit Manipal Education, the largest shareholder in Aakash.

The tribunal’s order halts changes to "Reserved Matters" under Aakash’s AoA, which require the consent of specific investors. Glas Trust, representing U.S.-based lenders owed $1.2 billion by Byju’s, and private equity firm Blackstone, a minority shareholder in Aakash, had filed separate pleas opposing the EGM.

The EGM, which was scheduled for November 20, allegedly aimed to enhance the rights of Manipal Education, which owns 40 percent of Aakash, while diluting the rights of Byju's and other minority shareholders.

The lenders accused Byju’s of misusing its assets, alleging that the EGM sought to strip shareholders of their rights through amendments to Aakash’s AoA. The alleged move was being seen as an attempt to reduce Byju’s control over its highly valuable asset.

In the previous hearings, the lenders had further raised concerns about Raveendran’s continued involvement in Aakash’s board decisions, despite the appointment of a resolution professional (RP) to oversee Byju’s parent company, Think & Learn.

“The RP is not bothered even though the assets of the company are being frittered away,” Glas Trust’s counsel told the tribunal during a hearing on Tuesday. Blackstone’s counsel had called the proposed EGM an “act of oppression” against minority shareholders.

Byju’s had acquired Aakash in 2021 for $940 million, offering 70% cash and 30% equity to its founders, the Chaudhry family, and Blackstone. However, the merger fell apart in 2023 after the Chaudhry family refused to complete a share-swap deal, citing governance concerns. In January 2024, the Manipal Group purchased a 40% stake in Aakash, becoming its largest shareholder.