Govt to change media holdings definition soon

The government has decided to expand the definition of the single largest shareholder in a news broadcasting venture by including the equity held by a relative, in case the single largest shareholder is an individual, and affiliate companies in case of corporate entities.

The single largest shareholder in a news broadcaster should hold at least 51 per cent equity in it and must be an Indian. The new definition will provide some leeway to the companies.

They will not have to limit themselves to just one holding company for the venture. This will give them the freedom to park the holding with multiple companies under the same group.

Similarly, in an individual-owned company, the equity can be spread across different individuals and need not have to be owned by one. In calculating the largest shareholder in the case of an individual-owned company, the 51 per cent equity can be held jointly with a relative of the promoter within the meaning of Section 6 of the Companies Act, 1956

In the case of a company, the 51 per cent equity can be held by an individual company as well as a group of companies under the same management and ownership control.

An Indian company is defined as a company which must have a resident Indian or a relative as defined under Section 6 of the Companies Act, 1956/, either on his own or in combination holding at least 51 per cent of the equity of the company.

On the other hand, while calculating the foreign equity in a news broadcasting company, the foreign holding component in the Indian shareholder will be duly reckoned on a pro rata basis so as to arrive at the total foreign holding in the applicant company.

This means that if the Indian promoter company has any foreign holding, it would also be considered while calculating the total foreign holding in the venture.

The government is also making it mandatory for news broadcasting companies to take the prior permission from the ministry of information and broadcasting before changing the foreign shareholding pattern and the shareholding of the largest Indian shareholder.

Cutting the cake

• Single largest shareholder in a news broadcaster should hold at least 51% and must be an Indian
• He doesn't have to limit himself to just one holding company
• This will give them the freedom to park the holding with multiple companies under the same group
• In an individual-owned company, the equity can be spread across different individuals and need not have to be owned by one