When a large company’s board is left with only three members, consisting of the promoter-couple and another close family member, it is a sign of deep distress. The beginning of a possible end for Byju’s was marked last week when three investor-directors resigned from the board, sending shockwaves through the world’s most valuable edtech company and India’s most highly valued startup.
The departing members of the board, however, should not be missed much. They likely found it wise to abandon the sinking ship to safeguard themselves from future liabilities and damage to their reputation. The question arises as to why they did not take this action sooner. Byju’s has delayed announcing its results for 18 months, which is an outrageous act for a company of its size. Corporate governance experts suggest that the directors should have resigned within three months of the results delay to send a strong message to the founder family, who they now accuse of being in total control.
Moreover, the credibility of the entire board suffered a severe blow when Byju’s auditor, Deloitte, disclosed that it did not receive the necessary documents to finalise the financial statements for the year ending March 2022, despite sending multiple letters to the board. Deloitte also noted that it had not received any communication regarding the resolution of audit report modifications, the status of audit readiness for the financial statements, or the underlying books and records for the year ending March 31, 2022. It is also quite perplexing that a company of this magnitude did not have a system for concurrent audit.
What can explain this apathy from the board? One reason could be the typical Indian culture of company boards aligning with management when times are good. No questions were asked as the majority of Byju’s investors enjoyed substantial returns on their investments. The company’s valuation skyrocketed 22 times from January 2018, when it became a unicorn valued at $1 billion, to March 2022, when it raised funds at $22 billion. However, those days now seem like a distant memory.
Read More at https://www.financialexpress.com/opinion/lessons-byjus-board-never-learnt/3146970/
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