Centre Denies Reports Clearing Byju’s of Financial Fraud, Investigations Ongoing
The Ministry of Corporate Affairs (MCA) has issued a clarification regarding ongoing proceedings against Byju’s under the Companies Act, stating that reports suggesting the company has been cleared of financial fraud are misleading. The ministry emphasized that investigations into the edtech giant are still underway, and no final conclusions should be drawn at this stage.
The Ministry of Corporate Affairs (MCA) has issued a clarification regarding ongoing proceedings against Byju’s under the Companies Act, stating that reports suggesting the company has been cleared of financial fraud are misleading. The ministry emphasized that investigations into the edtech giant are still underway, and no final conclusions should be drawn at this stage.
Recent media reports had indicated that a year-long probe by the MCA found no evidence of financial misconduct such as fund diversion or financial manipulation at Byju’s. However, the ministry refuted these claims, asserting that while governance shortcomings have been identified, definitive statements on financial wrongdoing are premature.
Byju’s, known for its rapid growth in the edtech sector, has faced significant challenges in recent times. Concerns prompted the MCA to initiate inspections of Byju’s financial records last year, triggered by issues including delays in finalizing financial statements and the resignation of an auditor.
The company’s financial strain was exacerbated by the return of students to physical classrooms post-pandemic and its acquisition of Aakash Educational Services. Additionally, Byju’s encountered setbacks such as auditor resignations, lenders initiating bankruptcy proceedings against its holding company, and legal disputes in the United States over loan terms.
Raveendran Byju, founder of Think & Learn, the parent company of Byju’s, attributed delays in the company’s recovery to challenges with foreign investors. These obstacles included restructuring the board, delaying financial disclosures, and addressing liquidity issues, which reportedly faced opposition during efforts to raise USD 200 million through a rights issue.
The MCA’s statement underscores the complexities surrounding Byju’s ongoing legal and financial challenges, highlighting the critical nature of ongoing investigations and the need for accurate reporting on corporate matters.
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