Byju’s: Investigation Reveals No Financial Misconduct, but Identifies Corporate Governance Failures

The Ministry of Corporate Affairs (MCA) conducted a probe into allegations against Byju’s, which included the manipulation of accounts and siphoning of funds, following complaints by the National Commission for Protection of Child Rights (NCPCR) and the Registrar of Companies (ROC). The probe concluded that the allegations were unsustainable, and it did not recommend referral to the Serious Fraud Investigation Office (SFIO).

The specific complaints against Byju’s included accusations of pressuring customers to continue using its products and services and refusing to issue refunds. The report highlighted the need for more transparency from the promoters and directors of Byju’s.

It also stated that most of the alleged corporate governance issues related to transparency and independence. The report noted that Byju’s has been taking steps to address complaints and grievances, with a majority of the 4,390 complaints being resolved.

Only a small percentage of the total paid customer base had pending complaints. The report also found no issues with the company’s accounting policy for revenue recognition.

Byju’s has been involved in various legal cases, including in the National Company Law Tribunal (NCLT), and is seeking to raise funds through a rights issue. However, the company has been restrained from utilizing any funds by the NCLT and is exploring out-of-court settlements with creditors.

Despite being valued at $22 billion previously, Byju’s is currently facing financial challenges. Global investment giant Prosus recorded a loss of $493 million in its annual report for FY24, leading to a write-off of the value of its shareholding in Byju’s.

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