The government issued guidelines for permitting 26 per cent foreign direct investment (FDI) in news and current affairs publications firms, subject to the condition that the largest Indian shareholder holds at least 51 per cent equity in a company. This 51 per cent equity is exclusive of the stake held by public sector banks and financial institutions.
In defining the largest shareholder in the case of an individual, the stake will include the holding of his relatives and also that of a company or a group of companies in which he holds a controlling interest and is part of the management. In the case of a company, it will include the holding of a group of companies under the same management and ownership.
As per the guidelines, if there is a combination of shareholders, the individuals concerned should have a legally binding agreement to act as a single unit in managing the entity.
Of the total FDI envisaged in any Indian company, at least 50 per cent would have to be through an issue of fresh equity. The balance 50 per cent can be from the existing equity of the company.
The foreign component in the equity of the Indian shareholder companies will be duly reckoned on a pro rata basis to arrive at the total foreign holding in the company while calculating the 26 per cent foreign investment.
The guidelines further stipulate that at least 75 per cent of the directors and all the key executives and editorial members of a company should be resident Indians.
According to the guidelines, it is obligatory on the part of an Indian company to take permission from the ministry of information and broadcasting before changing the foreign shareholding pattern and the shareholding of the largest Indian shareholder.
While rejecting the idea of a golden share, the government has said the applicant and the new entity have to make a full disclosure, at the time of application, of shareholders’ agreements and loan agreements that are finalised or proposed to be entered into. Any changes in these have to be disclosed to the ministry of information and broadcasting within 15 days.
The title verification of the company will also continue to be done by the Registrar of Newspapers as per the existing procedure.
An Indian company is also required to give the names and details of any foreign nationals and non-resident Indians to be employed and engaged in the company as consultants for more than 60 days in a year as regular employees.
All the proposals for FDI in Indian companies publishing news and current affairs publications will be processed and a decision will be taken by the information and broadcasting ministry in consultation with the home ministry and other ministries.