Aakash Institute seeks NCLT nod to amend Articles of Association amid shareholder feud

Aakash Institute, a subsidiary of Think & Learn, the parent company of Byju’s, on Tuesday, requested the National Company Law Tribunal (NCLT) bench to set aside a previous order that had prevented the coaching centre operator from amending its Articles of Association (AoA), citing the need to raise funds.The matter pertains to the institute seeking to remove the rights of minority shareholders and confer special rights on Ranjan Pai’s Manipal Education and Medical Group which holds around 40% stake in the company.

In order for the company to remain operational, there is a requirement for money through debt or equity, but with the status quo order neither can be facilitated, said the senior counsel representing Aakash Institute.

On November 20, the Bengaluru bench of the NCLT issued an order preventing Aakash Institute from amending its AoA during an extraordinary general meeting. This action was taken after minority shareholders, including private equity major Blackstone, filed a petition alleging the current management of mismanagement and oppression.

According to the counsel representing Aakash, the company needs a corporate guarantee to secure a loan which no other shareholder except Manipal is willing to offer. “We service 3.8 lakh students across India, and this company has a great future if it’s allowed to survive, but the petitioners (minority shareholders) would rather see us dead than see us survive in a manner not favourable to them,” the counsel added.

The bench raised concerns about whether the proposed amendment would impact the interests of Think & Learn as a shareholder, especially since it is currently undergoing the corporate insolvency resolution process (CIRP).

“We find that there is a shareholding of Think & Learn in this company, which is undergoing some process here. Therefore, we wouldn’t like anything to be messed with in respect of this company until we adjudicate on the matter of CIRP,” the bench noted.Dhyan Chinnappa, senior counsel for Manipal, said that the value of Think & Learn’s stake in Aakash Institute is dependent on how the company survives. Chinnappa argued that the minority shareholders had received rights on the shares as part of an agreement to merge Think & Learn and Aakash. The merger did not go through amid financial and regulatory issues at Think & Learn and hence these rights cease to exist.

Earlier ET reported that Glas Trust, which represents a group of US entities that lent $1.2 billion to Byju’s, questioned this move to remove the rights of minority shareholders as it may also affect Byju’s insolvency process as the edtech firm will lose control over Aakash. While Aakash is profit-making, Think & Learn, which runs the Byju’s platforms, is undergoing insolvency proceedings.