Aakash Institute Requests NCLT To Set Aside Order Not To Amend AoA

Aakash Institute Requests NCLT To Set Aside Order Not To Amend AoA

The action was taken after minority shareholders petitioned alleging mismanagement and oppression

Aakash Institute, a subsidiary of Think & Learn, the parent company of Byju's, has pleaded the National Company Law Tribunal (NCLT) to set aside the order preventing it from amending its Articles of Association (AoA), citing the need to raise funds.

The coaching institute had sought to remove the rights of minority shareholders and confer special rights on Ranjan Pai's Manipal Education and Medical Group which holds a 40 percent stake in the company.

Appearing for Aakash Institute, a senior counsel said that for the company to remain operational, it required finances through debt or equity. However, due to the status quo, neither could be facilitated. The company needed a corporate guarantee to secure a loan which no other shareholder except Manipal was willing to offer.

The counsel added, "We service 3.8 lakh students across India, and this company has a great future if allowed to survive, but the petitioners (minority shareholders) would rather see us dead than survive in a manner not favorable to them.”

In November last, the Bengaluru bench of the NCLT issued an order preventing Aakash Institute from amending its AoA during an extraordinary general meeting.

The action was taken after minority shareholders, including private equity major Blackstone, filed a petition alleging the current management of mismanagement and oppression.

The tribunal raised concerns about whether the proposed amendment would impact Think & Learn as a shareholder, especially since it is currently undergoing the Corporate Insolvency Resolution Process (CIRP).

The bench stated, "We find that there is a shareholding of Think & Learn in this company, which is undergoing the CIRP. Therefore, we would not like things to be messed up until we adjudicate on the process.”

Meanwhile, Dhyan Chinnappa, the senior counsel for Manipal, remarked that the value of Think & Learn's stake in Aakash Institute depended on how the company survives. The minority shareholders had received rights on the shares as part of an agreement to merge the two entities. Since the merger did not materialize amid financial and regulatory issues, the rights ceased.

It was reported that Glas Trust, representing a group of US entities that lent $1.2 billion to Byju's, questioned the move to remove the rights of minority shareholders as it could affect Byju's insolvency process and the edtech firm would lose control over Aakash.

While Aakash is a profit-making institution, Think & Learn, which runs the Byju's platforms, is undergoing insolvency proceedings.