The Karnataka High Court recently granted interim relief to Byju’s-owned Aakash Educational Services, as it stayed an order from the National Company Law Tribunal (NCLT). This order had previously barred Aakash from passing a resolution to amend its Articles of Association (AoA).
Background of the dispute
The crux of the matter lies in Byju's attempt to reduce the influence of minority shareholders through an amendment to its AoA. The investors, notably Blackstone-owned Singapore Topco, raised concerns that this move was aimed at giving a greater say to major investors like Manipal Education, thereby marginalizing the interests of minority stakeholders.
On November 20, NCLT sided with the investors directing Aakash Institute to refrain from implementing the resolution until a final decision is reached on the matter.
High Court's ruling
In a significant turn of events, the Karnataka High Court intervened by keeping the NCLT's order on November 25. The court found merit in Aakash's argument that the tribunal had failed to provide adequate reasoning for its decision to halt the resolution. Justice Hemant Chandangoudar emphasized the importance of substantiating legal orders in adherence to principles of natural justice, legality, and propriety.
Implications
The ongoing legal battle between Byju's-owned Aakash and its investors is a complex dynamic at play within corporate governance structures. While the high court's interim relief offers a reprieve to Aakash, the final decision of the tribunal will shape the company's governance framework moving forward. The outcome of this dispute will have significant ramifications for how companies navigate shareholder interests and voting rights.
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