Guidelines for FDI in news category of print media notified

NEW DELHI: The government has issued guidelines for foreign direct investment (FDI) up to 26% in the news and current affairs segment of the print medium. The guidelines contain safeguards to ensure that the letter and the spirit of the liberalisation measure are observed. The grant has been made conditional.
The norms specify that FDI up to 26% of paid-up equity of the ‘new entity’ — that is, the news company in which FDI has come in — would be allowed only in cases where equity held by the largest Indian shareholder is at least 51%. This would exclude the equity held by PSU banks and FIs . The term ‘largest Indian shareholder’ would include any or a combination of the following: The individual shareholder or a relative of the shareholder within the meaning of section 6 of the Companies Act, 1956 or a company/group of companies in which the individual shareholder/HUF to which he belongs has management and controlling interest. In the case of an Indian company, it could mean the company or a group of companies under the same management and ownership control.
However, in case of a combination of all or any of these parties, each of the parties should have entered into a legally binding agreement to act as a single unit in managing the new entity. While calculating 26% FDI, the foreign holding component, if any, in the equity of the Indian shareholder companies of the new entity will be taken into account on pro rata basis. At least 50% of the FDI will have to be inducted by issue of fresh equity. The balance 50%, may be inducted through transfer of existing equity.
The notification from the I&B ministry, issued on Thursday, says such investment would be permissible by foreign entities having “sound credentials and international standing�. Also, the entity created from the FDI should be a company registered with the Registrar of Companies. Title verification shall continue to be done by the Press Registrar
All proposals would be processed and decided upon by the I&B ministry after inter-ministerial consultations, including the home ministry. Permission would be granted only if four criteria are met. At least three-fourths of the directors on the board and all key executives and editorial staff should be resident Indians. Second, the applicant and the new entity should disclose, the shareholders’ agreements and the loan agreements that are finalised or proposed. Third, the new entity should frame its articles/memorandum of association to ensure compliance. And it will have take prior permission from the I&B Ministry before any alteration in the foreign shareholding pattern and the shareholding of the largest Indian shareholder.
The applicant would have to intimate the names and details of all NRIs who are proposed to be inducted in the board of the new entity. The company would also have 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.