By IANS,
New Delhi : The Indian government Thursday eased the norms for FM radio operations to push the growth of the sector.
“The cabinet today gave its approval to authorise the ministry of information and broadcasting to grant permission to FM broadcasting companies for creation of subsidiaries and mergers/demergers/amalgamations of companies by way of transfer of shares,” Information and Broadcasting Minister Priya Ranjan Dasmunsi said.
“Private FM broadcasters are at present facing various difficulties. It (the revised norms) would give them financial flexibility and hence the growth of the FM industry could be protected,” the minister added while briefing reporters here after a cabinet meeting presided over by Prime Minister Manmohan Singth.
Under the revised norms, no permission holder, whether with or without foreign investment, will be permitted to change the ownership pattern of the company through transfer of shares of the majority shareholders/promoters to any new shareholders without the written permission of the ministry.
“This permission will not be granted for a period of five years from the date of operationalisation of the channel, subject to the condition that the new shareholders conform to all the prescribed eligibility criteria,” the minister said.
“However, requests for transfer of shares for creating a subsidiary company, amalgamation of companies of the same group, or de-merger of company would be allowed within the period of five years, subject to the fulfilment of certain conditions,” the minister added.
The conditions are:
* The majority shareholders/promoters would continue to remain as majority shareholders/promoters and together should hold at least 51 percent of the total shares,
* The new corporate entities would maintain their FDI component within the prescribed limit and would not violate the terms and conditions of the tender document and Grant of Permission Agreement,
* The new corporate entities should have a minimum prescribed net worth and adhere to all the terms and conditions of the tender document and the provisions of the agreement,
* The new company shall sign a fresh agreement with the government on identical terms and conditions – except on transferability of shares – for the remaining license period of the original company,
* The transfer of shares would be permitted only once during the first five years from the date of operationalisation,
* No new tax regime will be designated to provide incentives to encourage creation of subsidiaries, mergers/demergers/amalgamations of FM broadcasting companies, and
* The Income Tax Act of 1961 Tax would govern the implications arising out of mergers/demergers/amalgamations.