**Aakash Educational Services Halts Share Allotment to Byju’s Parent Company**
Aakash Educational Services Limited (AESL) announced on Friday that it has suspended the allotment of shares to Think & Learn Pvt Ltd (TLPL), the parent company of Byju’s, due to compliance issues regarding a ₹25 crore deposit made for its ₹100 crore rights issue. The board of AESL determined that the funds provided by TLPL did not adhere to the Foreign Exchange Management Act (FEMA), the Companies Act, or the External Commercial Borrowings (ECB) guidelines.
Recently, AESL completed a ₹100 crore rights issue, approving share allotments to the Manipal Group and Beeaar Investco Pte. Ltd, which contributed ₹58 crore and ₹16 crore, respectively, reflecting their stakes of 58.8% and 16%. Despite previously opposing the rights issue in various legal forums, TLPL opted to deposit the ₹25 crore to participate in the allotment.
The decision to pause the investment stems from allegations made by Riju Ravindran, a former promoter of TLPL, who filed a complaint with the NCLT in Bengaluru. He claimed that TLPL raised the funds for its rights issue subscription through a debenture issuance that may violate FEMA and ECB guidelines. This matter is currently under investigation by the NCLT.
In response to AESL’s inquiries, the Resolution Professional of TLPL provided the Debenture Subscription Agreement with Byju’s Alpha, a Delaware-based entity, along with a legal opinion asserting compliance with FEMA. However, AESL sought independent assessments from a former Supreme Court justice and a retired RBI general manager, both of whom concluded that the debenture issuance and the associated funds did not comply with the relevant regulations.
AESL’s legal head emphasized that the funds received by TLPL are structured as a loan or debenture under external commercial borrowing, which cannot be utilized for acquiring equity shares in Aakash. Allowing such a rights issue could expose AESL to regulatory scrutiny for enabling an ECB to be used for equity investment.
A senior advocate cited by AESL confirmed that the debenture investment structure fails to meet FEMA requirements, raising further concerns about compliance.
In summary, AESL’s decision to halt the share allotment to TLPL underscores the complexities surrounding regulatory compliance in corporate financing, particularly in the context of Byju’s ongoing corporate insolvency resolution.
**FAQ**
**What led to Aakash Educational Services halting the share allotment to Byju’s parent company?**
Aakash Educational Services suspended the share allotment due to compliance concerns regarding a ₹25 crore deposit made by Think & Learn Pvt Ltd, which did not adhere to FEMA, Companies Act, or ECB guidelines.
