Just weeks after all independent members resigned from the startup’s board, a key investor in Byju publicly expressed frustration with the edtech giant’s reporting and governance practices. Prosus, one of India’s most prolific investors, said on Tuesday that Byju’s “reporting and governance structure is not adequate for a company of this size” and that it “disregarded advice and advice” despite repeated attempts.
Prosus, the Bengaluru-based startup’s largest external investor, said the company’s director resigned from Byju’s board after “he was unable to fulfill his fiduciary duty to serve the long-term interests of the company and its stakeholders”.
Byju’s, which is valued at $22 billion and India’s most valuable startup, earlier played down the reasons for Sequoia India, Prosus and the Chan Zuckerberg Initiative’s resignation from the board, saying directors “had to resign” from the board because their shareholdings fell below the minimum threshold stipulated in the equity agreement.
Prosus’ statement reads:
BYJU’s has grown significantly since our initial investment in 2018, but over time its reporting and governance structures have not been fully developed for a company of its size. Despite the efforts of our directors, BYJU’S executive leadership routinely ignores opinions and recommendations related to strategic, operational, legal and corporate governance matters. Our Director has decided to resign from the BYJU Board of Directors after a clear inability to fulfill his fiduciary duty to serve the long-term interests of the Company and its stakeholders.
BYJU’S is located at the intersection of India and Education, two very important strategic investment areas for Prosus. Although we no longer have a representative on the company’s board of directors, we still believe in the potential of BYJU’S and its role in revolutionizing access to quality education in India and around the world. As a shareholder, Prosus will continue to assert its rights, working with other shareholders and government agencies for the long-term interests of the company and its stakeholders.
Global auditor Deloitte also withdrew from Byju’s last month, saying it had not received “any communication” from Byju’s about its “audit readiness of the financial statements and related books and records for the year ended March 31, 2022”.
Prosus’s strongly worded statement on Tuesday was notable for a number of reasons. Prosus, one of Byju’s earliest backers, never sold any of its shares in the company. Prosus, which has also reduced its stake in Byju’s, said today that it has invested billions of dollars in India and remains a “long-standing and staunch supporter” of startups in India.
“While the companies and industries we work with in India and globally are high-growth and rapidly evolving, our stakeholders rightly expect us to hold ourselves and our portfolio companies to the highest standards of corporate governance and reporting,” it added.
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