Aakash Blocks Byju’s Rs 25 Crore Investment Over Regulatory Violations
Aakash Educational Services Limited (AESL) has suspended the allotment of shares worth Rs 25 crore to Byju’s parent company, Think & Learn Pvt Ltd (TLPL), citing serious allegations of FEMA, ECB, and Companies Act violations.
Key Takeaways
- Byju’s parent company’s Rs 25 crore investment in Aakash rights issue put on hold
- Alleged violations of FEMA, ECB guidelines, and Companies Act under scrutiny
- Legal experts confirm regulatory breaches in funding structure
- Investment would have diluted Byju’s stake in Aakash from 25.75% to 6.125%
Rights Issue and Regulatory Red Flags
AESL recently concluded its Rs 100-crore rights issue, successfully allotting shares to Manipal Group (Rs 58 crore) and Beeaar Investco Pte. Ltd. (Rs 16 crore). However, the board withheld TLPL’s Rs 25 crore deposit, submitted through its Resolution Professional, due to compliance concerns.
Legal Challenges and Expert Opinions
US lenders Glass Trust and Byju’s Alpha had previously opposed the fundraising effort through NCLT, NCLAT, and Supreme Court. After failing to block the rights issue, they attempted to participate in the funding round, triggering regulatory scrutiny.
AESL sought independent legal opinions from a former Supreme Court justice and retired RBI general manager. Both concluded that the debenture issuance used by TLPL violated FEMA, ECB guidelines, and the Companies Act.
“The money received by TLPL is in the nature of a loan under the ECB framework and cannot be used for acquiring equity in Aakash. Allowing such a subscription could expose AESL to regulatory action,” said Sanjay Garg, Head-Legal at AESL.
Ongoing Legal Proceedings
The Supreme Court had earlier dismissed appeals by Glass Trust and TLPL’s RP against Aakash’s rights issue. Adding to the complexity, former TLPL promoter Riju Ravindran filed an NCLT application alleging that TLPL raised Rs 25 crore through Rs 100 crore debentures that may violate FEMA and ECB norms. The tribunal is currently examining these allegations.
