The Hindu Business Line : Tata-Murdoch DTH venture clearance may take a while

THE NewsCorp chief, Mr Rupert Murdoch, might have to wait a little longer for his direct-to-home (DTH) venture to take off. The Ministry of Company Affairs is understood to have found certain inadequacies in the shareholders' agreement between Tata Sons and Network Digital Distribution Services (NDDS).

"The agreement has to be in conformity with the existing Company Law of the country," official sources said. They, however, refrained from pointing out the exact provisions in the agreement that are being scanned. The matter is now with the Company Affairs Minister, Mr Prem Chand Gupta.

The views of the Ministry in this case would be crucial to the future opening of the sector with the Information & Broadcasting Ministry clearly stating that the licence would be given only after it receives a clean chit from Company Affairs.

Official sources further revealed that the issues raised by the I&B Ministry are valid and that the Company Affairs Ministry is only looking at the shareholding pattern with reference to the Companies Act.

Recently, the I&B Ministry had sought the views of the Company Affairs Ministry on whether the minority foreign partner (with a holding of 20 per cent) could enjoy equal powers as that of the majority stakeholder in the venture. The joint venture envisages the Indian partners having 80 per cent stake in the company.

While the earlier provision of NDDS having the right to appoint the CEO has been dropped, the latest amended agreement submitted to the Government by the company is understood to have retained the clause that any major decision by the board would require the approval of at least one nominee director of the minority stakeholder. The fresh agreement provides for the board to appoint key officials and delegate powers.

In fact, the DTH guidelines issued by the I&B Ministry has clearly laid out 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.

Tata Sons would have the right to appoint the non-executive Chairman, who would not have a casting vote in case of a board room deadlock.

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