Govt tightens regulatory grip over digital media firms

Tightening its hold over digital media platforms, the government on Monday issued regulations that will entail strict compliance with FDI regulations and disclosure of ownership, funding and financial performance.

The Information and Broadcasting Ministry said that by October 15, 2021 digital media entities — those that upload/stream news and current affairs through digital media — will have to comply with the 26 per cent FDI norm.

It has also asked digital media entities to furnish information regarding their shareholding pattern and financial details within one month. Digital media entities that intend to bring in fresh foreign investments will need to get the government’s approval, the notice added.

The notice said that all digital media companies must furnish within a month details of their shareholding pattern along with the names and addresses of the directors and shareholders, as also of promoters and significant beneficial owners besides the latest audited or unaudited profit and loss statement and balance-sheet along with the auditor report.

FDI policy compliance

Digital media entities having foreign investments below 26 per cent will need to furnish a “confirmation with regard to compliance with pricing, documentation and reporting requirements under the FDI Policy, the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 and the Foreign Exchange Management (Mode of Payment and Reporting of Non-debt Instruments) Regulations, 2019 along with copies of relevant reporting forms in support of the past/existing foreign investment and downstream investment(s), if any,” the notice added.

Digital media companies that have an equity structure with foreign investment exceeding 26 per cent would also need to furnish all these details to the Ministry and must also take steps to bring down the foreign investment to 26 per cent by October 15, 2021. They also need the Ministry’s approval.

“Any entity which intends to bring fresh foreign investment in the country has to seek prior approval of the Central government, through the Foreign Investment Facilitation Portal of DPIIT, as per the requirements of the FDI Policy,” it added.

“Every entity has to comply with the requirements of citizenship of Board of Directors and of the Chief Executive Officers. The entities are required to obtain security clearance for all foreign personnel likely to be deployed for more than 60 days in a year by way of appointment, contract or consultancy or any other capacity for functioning of the entity, prior to their deployment,” the notice added. Digital media companies will need to apply to the Ministry at least 60 days in advance for approval for deployment of foreign personnel.

Ambit expanded

Last year, the government had permitted 26 per cent FDI in digital news entities through the government route. In October this year, the Department for Promotion of Industry and Internal Trade had issued a clarification that the 26 per cent FDI policy norm will also apply to news agencies that gather, write and distribute/transmit news directly or indirectly to digital media entities and/or news aggregators.

It also said that news aggregators that use software/web applications, aggregate content from various sources such as news websites, blogs, podcasts, video blogs, user submitted links in one location, will also need to adhere to the 26 per cent FDI norm. Last week, the government decided to bring content streamed on OTT platforms and news and current affairs content on digital platforms, under the ambit of the Information and Broadcasting Ministry.

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