FDI in print media (entertainment magazine)

Others 2014 views 3 replies

Malav Shah

Company Secretary and AVP Legal

171 Points Joined June 2009

Dear All,

I am looking for incorporating a company who's main object will include publishing, distributing of entertainment magazines. The promoter is a UK Citizen.

As per the Master circular of RBI on Foreign Investment in India,

FDI in print media is as under

1) Publishing of newspaper and periodicals dealing with news and current affairs : upto 26% under FIPB route. Subject to guidelines issued by Ministry of Information & Broadcasting. (https://www.mib.nic.in)

2) Publishing of scientific magazines/ specialty journals/ periodicals : upto 100% under FIPB route Subject to guidelines issued by Ministry of Information & Broadcasting. (https://www.mib.nic.in)

1) Will the above investment fall under Automatic Route or FIPB route?

According to me, it will require FIPB approval.

2) Suppose if the Foreign entity invest only upto 49% of Equity in the company and not 100%, then too we need to take FIPB approval.

your Views required.

Thanks

Malav

Replies (3)

Juzer Sadikot

CA - innovative solutions for Imports an

1309 Points Joined November 2008

Dear Malav,

Para 3 sub para (b) of Schedule I of FEM (Transfer and Issue of Security by person resident outside India) Regulation 2000 clearly specify the entry route for items stipulated in Annexure B of that schedule and shall require prior approval of FIPB. (I have reproduce relevant extract for your ready reference)

Also the approval is for entry purpose and FIPB can give approval to upto such % Foreign Direct Investment/ indirect investment.

Thanks

3. Issue of shares by a company requiring the Government approval.

An Indian company intending to issue shares to a person resident outside India in accordance with these Regulations shall obtain prior approval of the Foreign Investment Promotion Board of Government of India if the company;

(a) is engaged or proposes to engage, in any activity given in Annex A(A) to this Schedule; or

(b) falls under the FIPB route as stipulated under the column “Entry Route” in Annex B to this Schedule; or

(c) proposes to issue shares to a person resident outside India against considerations other than inward remittance i.e., against royalty/lumpsum fee due for payment; or

(d) proposes to issue shares to a person resident outside India, on or after November 28, 2003, against External Commercial Borrowings (ECBs) [excluding those deemed as ECBs] received in convertible foreign currency.†]

Ashis Mahapatra

Consultant-Tax & FEMA/FDI

183 Points Joined July 2009

Originally posted by :Malav Shah

Hi Malav & Juzer

I think u guys r ignoring the actual wording of Govt. guidelines on this regards.As per my knowledge both the case aproval is required and there is no automatic route in this sector.Wat is important in case of MAGAZINES more than 26% is not allowed at all .So there is no question/option of automatic.Here the guidelines of Ministry of Information & Broadcastings comes next.But for quantum of FDI/NRI etc investment will be guided by press note issued by FIPB/CCEA

Pls thoroughly chek pressnote 1(2009 series) on www.dipp .nic.in . This is given below -

Government of India

Ministry of Commerce & Industry

Department of Industrial Policy & Promotion

(FC Section)

Press Note No. 1 (2009)

Subject: Foreign investment in Print Media dealing with news and current affairs.

On a review of the extant policy on Foreign Direct Investment, Government of India has decided to allow foreign investment in publication of facsimile edition of foreign newspapers and Indian edition of foreign magazines dealing with news and current affairs as under.

2. Policy for foreign direct investment (FDI) in publication of facsimile edition of foreign newspapers

2.1 FDI up to 100% is permitted with prior approval of the Government in publication of facsimile edition of foreign newspapers provided the FDI is by the owner of the original foreign newspaper(s) whose facsimile edition is proposed to be brought out in India.

2.2 Publication of facsimile edition of foreign newspapers can be undertaken only by an entity incorporated or registered in India under the provisions of the Companies Act, 1956.

2.3 Publication of facsimile edition of foreign newspaper would also be subject to the Guidelines for publication of newspapers and periodicals dealing with news and current affairs and publication of facsimile edition of foreign newspapers issued by Ministry of Information & Broadcasting on 31.3.2006, as amended from time to time.

3. Policy for foreign investment in publication of Indian editions of foreign magazines dealing with news and current affairs.

3.1 Foreign investment, including FDI and investment by NRIs/PIOs/FII, up to 26%, is permitted with prior approval of the Government.

3.2 ‘Magazine’, for the purpose of these guidelines, will be defined as a periodical publication, brought out on non-daily basis, containing public news or comments on public news.

3.3 Foreign investment would also be subject to the Guidelines for Publication of Indian editions of foreign magazines dealing with news and current affairs issued by the Ministry of Information & Broadcasting on 4.12.2008.

4. FDI Policy announced vide Annex to Press Note 7(2008) dated 16^thJune 2008 against entry No. 27 stands amplified to the above extent.

GOPAL KRISHNA

Joint Secretary to the Government of India

F.No. 9(6)/2008-FC dated 14^thJanuary, 2009.