Star gets month to break its share mould

The uplinking guidelines issued today by the I&B Ministry stipulate a dominant Indian partner who has to put 51 per cent equity in a company with foreign equity desirous of uplinking from Indian soil. Star’s previous application had floated a shell company with actual control in Star — the 100 per cent Newscorp subsidiary.

The Government was forced to revise its own guidelines due to several loopholes that needed to be plugged — an action prompted after Star’s company Media Content and Communication Services (in which Star had 26 per cent stake with the remaining 74 per cent in different Indian shareholders with varying equity) applied for permission to uplink its news channel.

At a high-level meeting attended by the Prime Minister, Deputy Prime Minister, Law Minister, Information and Broadcasting Minister and Principal Secretary Brajesh Mishra last week, a decision was taken to make the rules for news channels on par with foreign investment guidelines announced for print.

The new rules stipulate that the applicant company should be registered/incorporated in India under the Companies Act with the foreign direct investment not exceeding 26 per cent of the paid-up equity of the applicant company.

The company will be required to make full disclosure, at the time of application, of shareholders’ agreements, loan agreements, and will be required to inform the ministry if changes are made.

Where the new guidelines differ from the March 26 guidelines is the inclusion of the following: the largest Indian shareholder must hold at least 51 per cent of total equity excluding equity held by public ; the representation on the board of directors shall as far as possible be proportionate to the shareholding; all appointments of key personnel (executive and editorial) shall be made by the applicant company without any reference from any other company, Indian or foreign; the applicant must have complete management control, operational independence and control over its resources and assets, and must have financial strength for running a news and current affairs television channel.

Star officials said that they will comply with the guidelines and that they needed time to look into the new rules. “We will soon be talking to potential partners and merchant bankers who have shown interest,” said a Star official.