Daijiworld Media Network - New Delhi
New Delhi, Nov 28: The board of Aakash Educational Services Limited (AESL) has halted the allotment of shares worth Rs 25 crore to Think & Learn Pvt Ltd (TLPL), the parent company of BYJU’S, citing alleged violations of FEMA rules, the Companies Act and External Commercial Borrowings (ECB) guidelines.
Concluding its Rs 100-crore rights issue, AESL approved the allotment of shares to the Manipal Group and Beeaar Investco Pte Ltd, which contributed Rs 58 crore and Rs 16 crore respectively, in line with their shareholding of 58.8% and 16%. TLPL, currently under corporate insolvency resolution process (CIRP), had attempted to subscribe by depositing Rs 25 crore despite earlier failing to block the rights issue before the NCLT, NCLAT and the Supreme Court.
The controversy deepened after Riju Ravindran, former TLPL promoter, approached the NCLT, Bengaluru, alleging that TLPL raised the subscription amount by issuing Rs 100 crore worth of debentures in a manner that may violate FEMA, ECB rules and the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019. The tribunal is examining the allegations.
While the Resolution Professional provided the Debenture Subscription Agreement with Byju’s Alpha Inc., a Delaware-based investor, along with a legal opinion claiming no FEMA violation, AESL sought independent advice. Opinions from a former Supreme Court judge, a retired RBI general manager and a senior advocate indicated that the debenture structure and fund inflow did not comply with FEMA, ECB Guidelines or the Companies Act.
AESL’s Head–Legal, Sanjay Garg, said TLPL’s funds appeared to be in the nature of an external commercial borrowing, which cannot be used to acquire equity in Aakash. He warned that allowing such an investment could expose AESL to regulatory action.
Following the legal consultations, AESL deferred the share allotment to TLPL. The Rs 25 crore deposited is likely to be maintained in a separate interest-bearing account until the NCLT gives its decision.
AESL also indicated that it may soon initiate another rights issue worth Rs 140 crore.