BYJU’S Responds to ED Show Cause Notices, Describes Them as Technical
Three points you will get to know in this article:
- BYJU’S responds to ED show cause notices, stating they are technical in nature and linked to delays in filing financial documents, confident of handling the matter.
- ED alleges BYJU’S of FEMA violations, claiming failure to submit documents against remittances made outside India.
- BYJU’S remains confident in its ability to address the situation and stay compliant with existing regulations.
BYJU’S, the prominent edtech decacorn, responded on Wednesday (November 29) to show cause notices from the Enforcement Directorate (ED), describing them as ‘purely technical’ and expressing confidence in effectively addressing the issue.
ED Queries and BYJU’S Compliance
In an official statement, the company clarified that the ED’s inquiries mainly stem from a delayed statutory audit for the financial year 2021-22 (FY22). BYJU’S emphasized that it had promptly submitted all required documents within the stipulated timeframe.
According to a spokesperson for BYJU’S, “The queries in the notice are purely technical in nature. Nevertheless, the company has consistently provided timely notifications for all Foreign Direct Investment (FDI), adhering to the legal eligibility criteria, and remains unaffected by the alleged lapse in filing Annual Performance Reports (APR). Furthermore, the company has diligently issued and allotted shares within the prescribed timeframe for the received FDI.”
This assertion underscores BYJU’S commitment to compliance and its confidence in navigating through the situation smoothly
Emphasis on Technical Nature of Queries
Delving deeper into the ongoing investigation by the Enforcement Directorate (ED), BYJU’S provided additional insights, noting that the ED’s inquiries primarily revolved around the tardy submission of Annual Performance Reports (APRs). The substantial delays, according to the educational technology powerhouse, were linked to approximately INR 8,000 Crores in overseas direct investments, stemming from the belated audit of fiscal year 2021-22 figures.
Underlining their confidence, the edtech giant highlighted that the ED notices did not outline specific fines, displaying a nonchalant attitude towards potential penalties. In their official statement, the prominent edtech player expressed the belief that any fines, should they materialize, would be nominal.
Anticipation of Nominal Fines BYJU’S expects fines
“Drawing from past actions of the Adjudicating Authority, we anticipate any fines to be of a nominal nature. As an illustration, the late submission fee for reporting delays under RBI regulations concerning APRs is very reasonable (INR 7,500). The notice, in essence, does not signify an impending fine,” remarked a spokesperson from BYJU’S.
Compliance with FEMA Regulations
The company emphasized its unwavering commitment to full compliance with all pertinent FEMA regulations, reassuring that it would persist in upholding adherence to the prevailing laws.
This clarification comes in response to show cause notices sent by the Enforcement Directorate (ED) to the embattled edtech giant, citing FEMA violations. According to the ED, the company purportedly neglected to furnish documents related to remittances outside India and failed to allocate shares corresponding to the Foreign Direct Investment (FDI) it received.
Furthermore, the ED contended that the edtech leader engaged in substantial foreign remittances and overseas investments, allegedly contributing to a loss of revenue for the exchequer. The company remains steadfast in addressing these concerns and maintaining its commitment to legal compliance.
BYJU’S faced a significant development on Wednesday as the Enforcement Directorate (ED) issued show cause notices, deeming them to be purely technical in nature. Despite the challenges, the edtech decacorn expressed confidence in effectively addressing the matter.
ED Allegations and Search Operations
In an official statement, BYJU’S clarified that the ED’s queries primarily stemmed from the delayed statutory audit of the financial year 2021-22 (FY22). Emphasizing their commitment to compliance, the company stated that all necessary documents had been promptly filed within the stipulated timeframe.
“The queries within the notice are technical in nature, yet we have contemporaneously submitted all requisite intimation for FDI, adhering to eligibility criteria in accordance with the law. This is irrespective of any alleged lapses in filing annual performance reports (APR). Additionally, we have diligently issued and allotted shares within the prescribed time against the received FDI,” affirmed a spokesperson for BYJU’S.
It’s worth noting that earlier in April, the ED had conducted search and seizure operations across multiple locations connected to BYJU’S and its founder, Byju Raveendran. Documents related to overseas investments and company funding were seized during the operation.
Valuation Mark Down by Dutch Investor
On the same day as BYJU’S response, Dutch investor Prosus marked down the valuation of its stake in the edtech giant to under $3 billion. This valuation is a significant drop from the peak of $22 billion during the last fundraising round.
BYJU’S Facing Multiple Challenges
Despite this valuation adjustment, BYJU’S appears resilient in the face of multiple challenges over the past year. From financial difficulties and changes in leadership to concerns about layoffs and delayed financial statements, the edtech giant remains in the spotlight. The company acknowledges the hurdles but remains steadfast in its commitment to overcoming these obstacles and continuing its mission in the education technology sector.
BYJU’S responded to show cause notices from the Enforcement Directorate, attributing them to delayed statutory audits and categorizing the queries as technical in nature. The company expressed confidence in its ability to address the matter effectively. Emphasizing its compliance with FEMA regulations, BYJU’S anticipated nominal fines based on precedent actions. The ED alleged violations related to overseas remittances and FDI, following search and seizure operations earlier in the year. Despite external challenges, including a valuation markdown, BYJU’S remains resolute in addressing the situation while maintaining compliance.
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