Aakash's ₹250-crore fundraise faces legal hurdles

“If the subscription to a rights issue faces a legal impediment for even one shareholder, the issue in its present form should not go through.”

“That creates an imbalance by design and undermines the very character of a rights issue.”

“Such dilution is not prima facie unlawful, NCLT will examine whether it was carried out in a manner consistent with the IBC (Insolvency and Bankruptcy Code), the Companies Act, and the principle of equitable treatment of stakeholders.”

“Technically, a fresh rights issue can be launched during CIRP (Corporate Insolvency Resolution Process), but prudence suggests awaiting clarity from NCLT on the earlier subscription structure. Otherwise, the company risks compounding disputes and undermining confidence in the resolution plan.”

“However, if the investment is to fund infrastructure activities of a wholly owned subsidiary, that may be treated differently. The intention of the law appears to be to prohibit speculative dealing in equity and not stone-wall genuine business expansion.”

“upGrad wishes to clarify that it is not in the K-12 sector, nor is our interest there; but there are assets in Think & Learn that are in the Higher-Ed space, as also where young learners/college graduates aspire to learn more, and we would be focused on those assets.”