In a shocking development, Netherlands-based European technology giant Prosus has publicly rebuked edtech major Byju’s, India’s leading startup, for disregarding its advice and not adhering to corporate governance norms.
On Tuesday, Prosus revealed that its board of directors had decided to step down from their position at Byju’s due to ongoing disagreements on corporate governance issues and “sustained disregard” of its advice.
The altercation between the two companies began in April this year, when Byju’s announced a massive merger of two of its affiliated entities — the Learning in Learning Private Ltd and Think and Learn Pvt. Ltd.
The move was perceived as a complete overhaul of the board, which was ultimately not regarded favourably by Prosus.
The Netherlands-based company pointed out that Byju’s ignored their advice and took decisions without consulting the board.
In a statement, Prosus said, “It has become clear that discussions and suggestions from Prosus relating to corporate governance matters and related matters have not been given due consideration. This disregard often occurred despite repeated requests from Prosus to make improvements and address concerns. Over a period of time, the governance issues worsened, with concerns increasing rather than decreasing as desired by Prosus.”
With the global COVID-19 pandemic looming large and its impact only increasing with time, the issue was especially disconcerting for Prosus, eventually leading to its decision to step down.
However, the company also did not fail to note that Prosus still retains its holding in Byju’s and also expressed its belief in its founder, Byju Raveendran, and the brand’s growth potential.
The Byju’s fiasco signals a shift in the Indian startup scene, with clear corporate governance norms and crucial ownership roles playing an increasingly central role in these ventures. According to industry experts, this move also indicates the increasing levels of professionalism expected of several Indian startups as they make their mark in the global market.
No clear statement or response has yet been issued by Byju’s on this matter. Nonetheless, it is clear that the heated altercation between Prosus and Byju’s highlights the importance of following corporate governance norms and adhering to basic advice from board members in order to ensure that a startup continues to grow and perform.
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