Byju's Founder Hit by ₹9,300-crore FEMA Violation Allegations, ED Issues Show-Cause Notices
The Enforcement Directorate (ED), India's financial crime-fighting agency, has issued show-cause notices to Byju's parent
Byju's Founder Hit by ₹9,300-crore FEMA Violation Allegations, ED Issues Show-Cause Notices
The Enforcement Directorate (ED), India's financial crime-fighting agency, has issued show-cause notices to Byju's parent company, Think & Learn Pvt Ltd, and its founder, Byju Raveendran, for alleged violations worth over ₹9,362 crore under the Foreign Exchange Management Act (FEMA), 1999.
ED initiated the inquiry in response to multiple complaints regarding the foreign investment received by the company and its business practices. These notices accuse Think & Learn and Raveendran of contravening various FEMA regulations, including non-submission of documents pertaining to foreign remittances, failure to realise proceeds from exports, and delayed filing of documents related to foreign investment.
Byju's, one of India's most prominent EdTech companies, has faced mounting challenges in recent months, including a slowdown in growth, increased scrutiny from regulators, and allegations of financial irregularities.
"The company was also stated to have made significant foreign remittances outside India and investments abroad, which were allegedly in contravention of provisions of FEMA, 1999, and caused loss of revenue to the government of India," ED said in a press release.
Acting on the gathered information, the ED conducted searches at the Bengaluru premises of Think & Learn Pvt. Ltd. and Byju Raveendran's residence in April of this year, seizing documents related to investments received by Byju's. Additionally, the ED interviewed Byju Raveendran and the then-Chief Financial Officer, Ajay Goel.
The ED's investigation determined that Byju's had breached FEMA regulations by failing to submit import documentation for advance remittances made outside India; failing to collect proceeds from exports made outside India; delaying the filing of documents related to foreign direct investment (FDI) received by the company; failing to file documents for remittances made by the company outside India; and failing to allot shares corresponding to FDI received by the company.
The show-cause notices add to the mounting challenges faced by the beleaguered EdTech startup. Amidst a $1.2 billion debt dispute with its lenders, the company is exploring the sale of its subsidiaries, Great Learning and Epic!, to generate funds for debt settlement.