NCLT Allows Glas Trust Hearing In Aakash Institute Minority Shareholder Rights
NCLT Allows Glas Trust Hearing In Aakash Institute Minority Shareholder Rights
Strap – Private equity major Blackstone and others had opposed the removal of their privileges, stating Manipal Education was favored
The Bengaluru bench of the National Company Law Tribunal (NCLT) has agreed to hear Glas Trust, which represents the US lenders of Byju's in the Aakash Institute case, where the ed-tech parent Think & Learn is a minority shareholder.
Some shareholders, including private equity major Blackstone, petitioned the tribunal against removing their rights and conferring special rights on Ranjan Pai's Manipal Education & Medical Group. The latter has a 40 percent stake in the coaching operator.
Glas Trust requested the NCLT to make it a party to the case. It contended that the removal of the shareholder rights could impact insolvency, as the ed-tech firm would lose control over its profitable affiliate.
While Aakash Institute is a profitable venture, Think & Learn is undergoing the Corporate Insolvency Resolution Process (CIRP).
Meanwhile, the tribunal held, “The point whether it is maintainable or not maintainable, whether they can be heard, not to be heard, we wouldn't want a situation where they have not been heard. We will hear them and decide their application along with others.”
However, Manipal and Aakash Institute opposed the plea, arguing that the case would be further delayed.
Dhyan Chinnappa, the senior counsel representing Manipal stated that it was a matter of oppression of minority shareholders and mismanagement. He added, "In this, a creditor cannot come, that too not of this company but of some other company."
Glas Trust had questioned a November 2024 extraordinary general meeting of Aakash Institute to amend the articles of association (AoA) of the coaching centre’s operator.
Blackstone and other minority shareholders of Aakash Institute refuted the company's claims that the reserved rights were transitory, and that the company struggled to operate due to the stay.
Representing the minority shareholders, senior advocate Darius Khambata held, "It is because I am a minority that I have this protection. It is not because I am a majority shareholder, nor because I was entering a merger framework agreement (MFA).”
He argued that minority shareholders had the rights before the MFA, provided they held 7 percent of the company's shares. The MFA strengthened the rights.
(The shareholders had received rights on the shares as part of an agreement to merge Think & Learn and Aakash Institute. However, the merger did not happen amid financial and regulatory issues at Think & Learn).
Thus, Manipal’s counsel argued that the minority shareholders gaining more rights after selling their shares did not make sense. The rights of the investors were not for an unlimited period once the shares were sold.
Chinnappa added, "The minority shareholders are saying I can hold one share and have all these rights, and I can hold 39 percent shares and have the same rights. It can't be like that. The objective of making it transitory was to protect it during the transitory phase when the MFA was in operation.”
