Indicating a further trouble for Byju’s, recently a report has claimed that the Serious Frauds Investigation Office (SFIO) has initiated a probe into the edtech company’s alleged governance lapses and financial reporting compliance failures.
SFIO Commencing Probe Into Byju’s Alleged Governance Lapses
Here SFIO, is a multidisciplinary body under the Ministry of Corporate Affairs.
Earlier, the media reported that SFIO had commenced the investigation in Byju’s case On July 8.
In its defense, Byju’s said it has not received any communication from the SFIO on the launch of such a probe till date as clarified in the report.
So far, an official confirmation on the news report was also awaited.
While representing Byju’s, the Managing Partner, MZM Legal LLP, Zulfiquar Memon said, “Our client is not aware of any such discussions, this news is completely speculative and I am not sure of its source.”
Adding, “We are confident in our compliance and are prepared to address any queries or concerns raised by the authorities in a timely, responsible and cooperative manner.”
Forming BAC to Provide Advice and Guidance
Interestingly, this report comes around two weeks after 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, stepped down from the board of Byju’s over differences with founder Raveendran.
Not only that, 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 on the same day.
Byju’s founder Byju Raveendran organized an extraordinary general meeting on July 4, considering the crisis.
During the meeting, Raveendran told shareholders that a Board Advisory Committee will be formed to provide advice and guidance to the CEO on matters pertaining to the composition of the board and the governance structure suitable for Byju’s.
It appears that the SFIO investigation comes at a time when the country’s most valued startup has decided to set up a Board Advisory Committee (BAC) to mitigate the backlash on corporate governance issues.
Besides this, Byju’s is also looking to take one of its subsidiaries, Aakash Educational Services, to the public markets through an IPO for a listing.
The BAC will serve as a working group consisting of independent directors with credible backgrounds and relevant experience from diverse corporate fields, and is expected to advise the founder & CEO, Byju Raveendran, on Board composition and governance structure best suited for Byju’s size and scale.
