A key investor in Byju has publicly expressed dissatisfaction with the edtech giant’s reporting and governance practices, just weeks after all independent board members resigned. Prosus, one of the most prolific investors in India, stated on Tuesday that Byju’s “reporting and governance structures did not evolve sufficiently for a company of that size” and that despite repeated attempts, Byju “ignored advice and recommendations.”
The director of Prosus, the largest external investor in the Bengaluru-based startup Byju, resigned after it became apparent that “he was unable to fulfill his fiduciary duty to serve the long-term interests of the company and its stakeholders.
Byju’s, the most valuable startup in India at a valuation of $22 billion, had previously minimized the reason why Sequoia India, Prosus, and Chan Zuckerberg Initiative had resigned from its board, stating that the directors “had to vacate” the board because their shareholding fell below the minimum threshold stipulated in the shareholding agreement.
The following statement is from Prosus:
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.
The decision for our Director to step down from the BYJU’S Board was taken 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.
BYJU’S sits at the intersection of India and Education, two very important and strategic areas of investment for Prosus. Although we no longer have a representative serving on the Board of the Company, we continue to believe in the potential of BYJU’S and its role in revolutionising access to quality education in India and around the world.
As a shareholder, Prosus will continue to assert its rights, collaborating with other shareholders and government authorities to safeguard the long-term interests of the Company and its stakeholders.
Global auditor Deloitte also resigned from Byju last month, stating that it had not received “any communication” from Byju regarding the “audit readiness of the financial statements and the underlying books and records for the year ended March 31, 2022.”
For a variety of reasons, Prosus’s scathing statement on Tuesday is extraordinary. Prosus is one of the company’s earliest investors and has never sold any of its shares. Prosus, which has also reduced the value of its stake in Byju’s, stated today that it has invested billions of dollars in India and continues to be a “long-standing and committed supporter” of Indian entrepreneurship.
“While the companies and industries we work with in India and around the world are high-growth and rapidly evolving, our stakeholders expect us to hold ourselves and our investee companies to the highest standards of corporate governance and reporting,” the statement continued.