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FM radio to be Indian, by Indian

18-August-2005
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FM radio to be Indian, by Indian

Single largest shareholder should own at least 50% of the paid-up equity.

The single largest shareholder in a private FM radio company in India will have to own at least 50 per cent of the paid-up equity. The shareholder will also have to be an Indian entity for bringing in foreign equity.

This has been incorporated in the bid document, yet to be released, to make sure Indian entities control FM radio companies. But this condition will not apply for banks and other lending institutions holding majority stake in a company.

The government has also decided to allow only resident Indians as directors on the boards of FM radio companies. Observers say this is likely to hamper foreign investment in the sector. FM radio companies point out that when a foreign company invests in an entity, it will prefer to have its own representative on the board.

Foreign shareholders will also have no say in the management of FM radio companies in India. This is because the government wants only the majority shareholder to exercise management control over an FM radio company.

Besides, FM radio companies will not be permitted to change the ownership of the major shareholder without government permission.

In addition, during the licence period, if the government comes out with a policy on cross-media ownership, the licence holder will have to conform to the revised guidelines within a period of six months.

Private FM radio companies that want to set up stations in all cities will have to have a minimum net worth of Rs 10 crore.

If a company wants to start a radio station in a metro, the minimum networth required per channel will be Rs 3 crore. This condition is aimed at preventing non-serious players from entering the sector.

For category B cities, which are mid-sized cities, the minimum networth per radio station will be Rs 2 crore and for small cities, it has been capped at Rs 1 crore. In the case of smaller cities, the minimum networth will be Rs 50 lakh.

Companies will be allowed to run only one channel in each city but they will not be permitted to air news and current affairs programmes on FM channels.

NO MELODY THIS

The shareholder will have to be an Indian entity for bringing in foreign equity

Only resident Indians to be allowed as directors on the boards of FM radio companies

Observers say foreign investment in the sector is likely to be hampered

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