• Notification Date: 28-02-2024
• Notification No: N/A

MCA asks to Speed up Inspection Report on Byju’s

The Ministry of Corporate Affairs (MCA) has asked its probe team for faster submission of the inspection report on Byju’s which is running three months beyond schedule, a senior government official said. 

“The Ministry of Corporate Affairs (MCA) has asked to expedite submission of inspection report on Byju’s. It is already 2-3 months overdue,” the official stated. 

Byju’s came under the ministry scrutiny over governance lapses and compliance issues. “Once the inspection report is submitted, based on its findings, the ministry will decide if investigation is needed in the company," the official said. 

There is no Serious Fraud Investigation Office (SFIO) probe against Byju’s currently, he said. SFIO, which is a multidisciplinary body under the Ministry of Corporate Affairs. 

In July 2023, reports claimed that the SFIO has initiated the probe into the edtech company's alleged governance lapses and financial reporting compliance failures 

Three key directors representing some of the largest shareholders of Byju's--GV Ravishankar of Peak XV Partners (Sequoia Capital India), Russel Dreisenstock of Prosus and Vivian Wu of Chan Zuckerberg Initiative, had stepped down from the board of Byju's in 2023. Deloitte, Byju's auditor and one of the largest audit firms globally, also resigned citing a "long delay" in the company's FY22 (2021-22) results. 

An inspection by the Ministry of Corporate Affairs was also initiated last year on account of alleged violation of the Companies Act. 

The group of Byju's investors now plan to restructure the board of directors to increase shareholder representation, incorporate independent input, and improve corporate governance. Byju’s investors seek to create a nine-member board within 30 days, nominate three independent directors by shareholders, appoint three shareholder directors, and two company executive management employees on the new board. 

The group seeks to then determine CEO and CFO (chief financial officer) status for each entity under Byju’s and the same on the group level. Investors then plan to also establish an interim succession plan, including hiring a third-party temporary CEO for the consolidated entity. 

Investors also plan to conduct an independent forensic investigation into various actions, including acquisitions, alleged breaches, regulatory affairs, tax filings, and payments. A forensic expert might also be appointed within thirty days to investigate and suggest improvements.