The proposed shareholding pattern and the management structure of Space TV, the 80:20 direct-to-home venture between Tata Sons and Rupert Murdoch's Network Digital Distribution Services (NDDS), is being examined by the Ministry of Company Affairs.
Official sources said that the aspect that the Ministry is likely to examine is the proposal where the foreign partner has the power to appoint the CEO, despite a minority holding of 20 per cent.
"We are looking into the entire shareholding pattern and management structure of the company and convey our views to the Information and Broadcasting Ministry," official sources said.
The DTH guidelines clearly state that the applicant company must have Indian management control with majority representatives on the board as well as the chief executive of the company being a resident Indian.
The Ministry would take a view on whether a person of Indian origin can be appointed by Star as CEO, despite having a minority holding.
According to the agreement signed between the Tatas and the NDDS, the CEO would have the powers to decide structure of the management team and also appoint key persons on the board of the company.
Tata Sons, on the other hand, would have the right to nominate the Chief Financial Officer (CFO) as well as the non-executive Chairman, who would not have a casting vote in case of a boardroom deadlock.
As per the joint venture, the board would have eight Tata nominees and two NDDS nominees, with the CEO reporting to it. Also, NDDS would have the powers of choosing the foreign institutional investors that could invest in the company.
Other guidelines stipulate that the total foreign equity holding including FDI/NRI/OCB/FII in the applicant company should not exceed 49 per cent with a 20 per cent foreign direct investment cap. Also, broadcasting companies and cable network companies will not be eligible to collectively own more than 20 per cent of the total equity of the applicant company.
The Space TV application has been pending with the Information and Broadcasting Ministry for over a year with the Ministry raising questions on the management control of the joint venture company.
Senior officials in the I&B Ministry said, "We have got the final set of responses from Space TV and some changes in the management structure have been worked out. We will consult other regulatory Ministries before giving it our nod."