MCA Finds Byju's Cleared Of Fraud But Governance Failures Exposed, Probe Continues
The company's rapid expansion led to a cash shortage and a decline in valuation, resulting in multiple lawsuits in India and the US
According to media reports, an investigation by the Ministry of Corporate Affairs (MCA) has found lapses in corporate governance at Byju's but uncovered no evidence of financial fraud.
As per media reports, the year-long probe revealed no signs of fund siphoning or financial account manipulation. However, it identified governance issues contributing to the startup's growing losses. According to sources cited by Bloomberg, the ministry's investigation provides some relief to Byju's, temporarily halting any new scrutiny by Indian officials on already investigated issues.
Media reports indicate the investigation did not directly address whether founder Byju Raveendran was responsible for the governance lapses or if he remains fit to lead the company. Investors have recently called for his removal due to management and compliance failures.
The probe highlighted that poor corporate governance and compliance practices, combined with changes in the funding environment, contributed to Byju's increasing losses, according to media reports. The startup's failure to hire professionals to manage finances and compliance was noted as a significant issue.
Media reports also mentioned that Byju's did not fully disclose acquisition details to all directors and held meetings to approve such deals on short notice. The founders argued that some directors were investors in rival companies.
Despite the findings, the investigation does little to resolve Byju's broader issues, according to media reports. The company's rapid expansion led to a cash shortage and a decline in valuation, resulting in multiple lawsuits in India and the US.
At its peak, Byju's was valued at USD 22 billion, but as per media reports, the company's valuation has plummeted. Prosus, an investment firm owned by Naspers, announced it had written off the value of its 9.6 per cent stake in Byju's, reflecting severe financial difficulties.
As per media reports, founder Byju Raveendran's net worth has dropped to zero, reflecting the company's severe financial troubles.
