The National Company Law Tribunal (NCLT) in Bengaluru has dismissed edtech giant BYJU’S request to stop Aakash Educational Services Limited (AESL) from conducting its extraordinary general meeting (EGM) to approve a rights issue. The tribunal stated that there was no unfairness in AESL’s move, allowing the company to go ahead with its plans to raise much-needed funds.
BYJU’S, which owns around 25.75% in Aakash, had filed a plea seeking to halt the EGM, claiming that the proposed rights issue would severely dilute its shareholding. The company argued that the issue was being done in a manner that violated the rights of existing shareholders and was against the Articles of Association (AoA) agreed upon during its acquisition of Aakash in 2021.
However, the NCLT bench disagreed, observing that a shareholder’s inability or unwillingness to participate in a rights issue does not make the action unfair or discriminatory. The decision gives Aakash the green light to proceed with raising capital estimated to be around ₹500 crore, crucial for its operational stability.
Why BYJU’S Wanted to Stop the Meeting
The legal tussle arises from BYJU’S claim that its shareholder rights are being undermined. The company said that the Aakash board’s decision to call the EGM without its approval violated their prior agreement. BYJU’S is currently going through insolvency proceedings and argued that it was not in a financial position to participate in the rights issue, which would automatically reduce its ownership in Aakash.
If Aakash successfully issues the new shares, BYJU’S stake could fall from nearly 26% to below 5%, drastically reducing its influence in the company. This dilution would be a major setback for the edtech firm, which has already been struggling with mounting debts, delayed salaries, and investor disputes.
Aakash’s Urgent Need for Funds
Aakash Educational Services has been facing financial pressure and has cited the urgent need for working capital. The company told the tribunal that the rights issue is necessary to keep operations running smoothly. The funds, estimated at ₹500 crore, will help the company manage daily expenses, pay staff salaries, and maintain classes for its nearly 3.5 lakh students.
Aakash has around 5,000 employees and continues to be a key name in India’s test preparation sector. The company maintained that raising funds is critical for ensuring stability and avoiding any disruption to its services.
What Lies Ahead for BYJU’S and Aakash
For BYJU’S, the NCLT’s verdict is another setback in an already difficult year. The company, once India’s most valuable startup, has seen its valuation and market reputation decline sharply. With its stake in Aakash at risk, BYJU’S might lose one of its most valuable assets at a time when it needs financial strength the most.
For Aakash, the ruling offers a chance to regain control of its finances and continue operations without interference. However, the company will still need to navigate the dilution of existing shares and maintain investor confidence.
This episode highlights the larger crisis in India’s edtech sector. The BYJU’S–Aakash dispute is not just about ownership but about survival and strategy in a changing education market. As Aakash prepares to move forward with its rights issue, all eyes are now on how BYJU’S responds — whether it appeals the verdict or finds another way to protect its stake.