📷 Image Credits: Moneycontrol
Byju’s, the online education startup, has been cleared of financial fraud following a yearlong investigation by the Ministry of Corporate Affairs in India. The probe found no evidence of wrongdoing such as siphoning of funds or manipulation of financial accounts, but highlighted governance shortcomings that led to the company’s increasing losses. The report, though not yet public, offers some relief to founder Byju Raveendran, who has faced accusations of mismanagement from investors.
The investigation was initiated after complaints were filed by entities such as the National Commission for Protection of Child Rights and the Registrar of Companies, alleging issues with Byju’s corporate governance practices. While the probe did not recommend referring the allegations to the Serious Fraud Investigation Office, it did acknowledge lapses in transparency and independence within the company’s operations.
One of the key findings of the report was that Byju’s did not fully disclose details of acquisitions to all directors, and meetings to approve such deals were called at short notice. The startup also failed to bring in professionals to oversee finances and compliance, contributing to its financial losses. Additionally, the report noted that some Nominee Directors resigned citing issues with important financial and business policy deliberations.
Despite the clearance of financial fraud allegations, Byju’s continues to face challenges including a cash crunch, multiple lawsuits in India and the US, and restrictions from utilizing funds raised through a recent share issuance. The company is currently involved in out-of-court settlements with creditors and is exploring ways to resolve its financial difficulties.
Once valued at $22 billion, Byju’s has seen a significant decline in its worth and is now battling to sustain its operations in the competitive edtech market. The findings of the investigation serve as a mix of relief and concern for the company and its stakeholders, as they navigate through governance issues and financial challenges.
