FDI IN PRINT MEDIA GUIDELINES
FOR NEWS AND CURRENT AFFAIRS PUBLICATION
The Ministry of Information
and Broadcasting has issued guidelines for Foreign Direct Investment
(FDI) in Indian entities publishing newspapers and periodicals
dealing with news and current affairs. The Union Government had
earlier decided to allow Foreign Direct Investment upto 26 per
cent of paid up equity capital in Indian entities publishing newspapers
and periodicals dealing with news and current affairs. Such investment
would be permissible by foreign entities having sound credentials
and international standing, subject to certain conditions.
Nine copies of the
prescribed application form, duly filled in, alongwith the requisite
documents shall be submitted to the Ministry of Information and
Broadcasting. Application fee of Rs. 5000/- will have to be submitted
through demand draft made in favour of Pay & Accounts Officer,
Ministry of Information and Broadcasting, payable at New Delhi.
Title verification shall continue to be done by the Press Registrar
as per existing procedure.
FDI will be allowed
only where the resultant entity (hereinafter called "New
Entity") is a company registered with the Registrar of Companies
under the provisions of the Companies Act, 1956. Only Foreign
Direct Investment upto 26 per cent of paid-up equity of the New
Entity will be allowed. Permission will be granted only in cases
where equity held by the largest Indian shareholder is at least
51 per cent of the total equity, excluding the held by Public
Sector Banks and Public Financial Institutions as defined in Section
4A of the Companies Act, 1956, in the New Entity. The term largest
Indian shareholder used in this clause will include any or a combination
of the following:
1) In the case of
an individual shareholder,
a) The individual
shareholder
b) A relative of
the shareholder within the meaning of section 6 of the Companies
Act, 1956
c) A company/group
of companies in which the individual shareholder/HUF to which
he belongs has management and controlling interest
2) In the case of
an Indian company,
a) The Indian company
b) A group of Indian
companies under the same management and ownership control.
Provided that in
case of a combination of all or any of the entities mentioned
in sub-clause (1) and (2) above, each of the parties shall have
entered into a legally binding agreement to act as a single unit
in managing the matters of the New Entity.
While calculating
the 26 per cent FDI in the equity of the New Entity, the foreign
holding component, if any, in the equity of the Indian shareholder
companies of the New Entity will be duly reckoned on pro rata
basis so as to arrive at the total foreign holding in the New
Entity.
At least 50 per cent
of the FDI will have to be inducted by issue of fresh equity.
The balance, viz upto 50 per cent of the FDI, may be inducted
through transfer of existing equity.
All proposals for
FDI in Indian entities publishing newspapers and periodicals shall
be processed and decided upon in the Ministry of Information and
Broadcasting on the basis of inter-ministerial consultation with
the Ministry of Home Affairs and other Ministries, as may be required.
The applicant will
be required to intimate the names and details of all persons not
being resident Indians who are proposed to be inducted in the
Board of Directors of the New Entity.
The Company will
be liable to intimate the names and details of any foreigners/NRIs
to be employed/engaged in the New Entity EITHER as consultants
(or in any other capacity) for more than 60 days in a year, OR,
as regular employees.
The Permission of
the Ministry of Information and Broadcasting would be incumbent,
inter alia, upon the following: -
(i) Permission would
be conditional on at least 3/4th of the Directors on
the Board of Directors of the New Entity and all key executives
and editorial staff being resident Indians.
(ii) The applicant
and the New Entity making full disclosure, at the time of application,
of Shareholders’ Agreements and Loan Agreements that are finalized
or proposed to be entered into. Any subsequent changes in these
would be disclosed to the Ministry of Information and Broadcasting
within 15 days.
(iii) The New Entity
framing its Articles/Memorandum of Association to ensure compliance
with the above.
(iv) It will be obligatory
on the part of the New Entity to take prior permission from Ministry
of Information and Broadcasting before effecting any alteration
in the foreign shareholding pattern and the shareholding of the
largest Indian shareholder indicated in clause 3 (iii) above.
