The Byju’s corporate (mis)governance saga is getting an important chapter added to it, this time being written by one its biggest backers. A month after it tendered its resignation from the edtech giant’s board, Prosus NV revealed that the firm “regularly disregarded advice” despite repeated efforts by the director of Prosus, and that its reporting and governance structure did not evolve sufficiently for a company of that scale.
“BYJU’S grew considerably since our first investment in 2018, but, over time, its reporting and governance structures did not evolve sufficiently for a company of that scale. Despite repeated efforts from our Director, executive leadership at BYJU’S regularly disregarded advice and recommendations relating to strategic, operational, legal, and corporate governance matters,” Prosus revealed in a written statement on the matter. This also comes a few months after Prosus reduced the worth of its stake in Byju’s, thereby putting the total valuation of the edtech firm at a diminished $5.1 billion, which is a far cry from the $22 billion it was valued at in 2022.
The global investment group went on to add that its director – Russell Dreisenstock – parted ways from the edtech giant and stepped down from its board “after it became clear that he was unable to fulfil his fiduciary duty to serve the long-term interests of the Company and its stakeholders.”
For its part, Byju’s downplayed the development, announcing that it had “noted the observations of our valued investors. We have updated our shareholders about definitive steps taken to improve corporate governance and financial reporting.” It added that the directors decided to part ways with the company and the board since their shareholding fell below the minimum threshold set in the shareholding agreement.
For those who need a reminder, Dreisenstock joined GV Ravishankar of Peak XV Partners (Sequoia Capital India) and Vivian Wu of Chan Zuckerberg Initiative in quitting Byju’s board of directors at the same time the edtech giant lost Deloitte – its auditor. The three investors were some of the largest shareholders of the Bengaluru-headquartered edtech firm.
Following their resignations, Byju’s CEO Byju Raveendran conducted an extraordinary general meeting (EGM) earlier this month. Amongst other things, Raveendran proposed the setting up of a Board Advisory Committee (BAC) that will be charged with advising and guiding the CEO when it comes to the composition of the board and the governance structure that is suitable for the edtech firm.
The newest attack to Byju’s executive leadership continues to add to Byju’s headaches, and comes at a time when the company is already facing tough times. It has, in recent years, spent over $2.5 billion to fund an aggressive expansion across the globe, and responded to the tough economic conditions with mass layoffs and other cost-cutting measures. Its delays in filing its earnings already cost it Deloitte – whose original term was supposed to end in 2025 – and Byju’s has now pledged to file the audited earnings for the previous year by September. And if this was not enough, it also suffered raids of its offices as its books attracted the scrutiny of the country’s Ministry of Corporate Affairs.