Aakash Educational Services puts ₹25 crore Byju’s parent’s rights issue subscription on hold, cites compliance reasons
Aakash Educational Services Limited (AESL) said on Friday that it has suspended allotment of shares to Think & Learn Pvt Ltd (TLPL) and raised compliance concerns regarding the same. ₹25 crore that Byju’s parent company has invested for him. ₹100 crore rights issue.
AESL said in a statement that its board of directors ₹25 crore remitted by TLPL did not comply with Foreign Exchange Management Act (FEMA) rules, Companies Act or External Commercial Borrowing (ECB) rules.
Aakash Educational Services board of directors recently concluded ₹100 crore rights issue in which it approved allotment of shares to Manipal Group and Beeaar Investco Pte. Ltd — with contributing companies ₹58 crore and ₹16 crore — in line with their stakes of 58.8% and 16% respectively.
Byju’s parent company TLPL, which is currently in the corporate bankruptcy resolution stage, had earlier opposed the rights issue. NCLT, NCLAT and Supreme Court. But he still decided to deposit the money. ₹Aakash said the subscription for the same was 25 crore.
Why did Aakash block Byju? ₹25 crore subscription?
Citing reasons for disinvestment, Aakash Educational Institute said: Riju Ravindran, one of the former promoters of TLPL, filed an application before the NCLT in Bengaluru. He claimed that ₹25 crore subscription by publishing rights ₹100 billion bonds”>TLPL collected the money ₹25 crore subscription by publishing rights ₹100 million bonds in a structure that may violate FEMA, ECB guidelines and Foreign Exchange Management (Non-Debt Instruments) Rules, 2019.
These allegations are currently being investigated by the NCLT.
In response to AESL’s disclosure inquiry, TLPL Resolution Specialist presented the Debt Subscription Agreement between TLPL and Byju’s Alpha, a Delaware-based entity, along with a legal opinion stating that the subscription money did not violate FEMA laws.
But AESL also sought independent opinions, including from a former Supreme Court judge and a retired RBI director general. The company said these individuals determined that the bond issuance and infusion of funds did not comply with FEMA, ECB Guidelines or the Companies Act.
“It is clear that the money received by TLPL is in the nature of a loan/bond within the framework of external commercial borrowing and cannot be used for the purpose of purchasing equity capital, i.e. shares in Aakash. If any investigation is carried out by a regulatory authority, Aakash may be accused of authorizing a rights issue and thus enabling the use of the ECB for the purpose of equity investment,” said AESL’s legal head.
A senior lawyer quoted by AESL also confirmed that the structure of the bond investment did not meet the requirements of FEMA, the Master Guidelines on Foreign Investment in India; and ECB Guidelines according to AESL.
The board of directors of AESL, taking into account legal opinions, decided to postpone the allotment to TLPL until the pending issues are clarified by the NCLT. until the final decision is made ₹The Rs 25 crore deposited by TLPL is likely to be kept in a separate interest-bearing bank account, the company said.
