to
in
important provision in the Ordinance is section 11(1)(b). There may be a question as to whether the Licensee or its holding company would continue fall within the definition of "ordinarily resident Hong Kong", pursuant to section 2. In particular, part (b)(iii) of that definition is relevant. If the Licensee or its holding company were to be effectively controlled by foreign interests, the provisions of section 11(1)(b) may be contravened by the Licensee. Contravention of section 11(1) is dealt with by the provisions of section 11A(2) which require the Licensee to notify the Television Authority and the Stock Exchange where registration of a transfer of shares would contravene that section, and to refuse to register such transfer. However, if the transfer of shares was in respect of the Licensee's holding company and not the Licensee itself, this section would appear not to apply.
13
imposition of Authority for
Section 37 provides for the financial penalties by the Television failure to
to comply with any provision of the Ordinance. Section 14(1) provides for revocation where the Governor in Council considers that there may be cause for revoking the licence. Such revocation, however, requires under the provisions of section 16(1), 18 months' prior written notice to the Licensee. It may be that a takeover by foreign interests would not be sufficient cause for this section to be invoked. In this connection members may wish to note that in 1981 approval was given to an Australian consortium to exercise control of the then Rediffusion Television Limited (RTV) by way of a proposed acquisition of 61.2 per cent of the share holding in the then RTV (XCC (81)30).
14
It
does
appear,
that although the clearly-discernable policy aim of the Ordinance is to prevent foreign ownership or control of television licensee companies the machinery does not exist within the Ordinance to prevent such an eventuality. It has been compounded by the approval given to the Australian consortium to exercise control over the then RTV which has set a precedent. This together also with the fact that the Television Ordinance has been amended to allow Commonwealth citizens, as opposed to British subjects, ordinarily resident in Hong Kong to be directors or principal officers of a company holding a television licence has further eroded the effectiveness of the Ordinance in this regard. A television Licensee company could therefore become subject to foreign control through a corporate structure which satisfies all legal requirements specified in the Television Ordinance. It would not be easy for the Administration to frustrate the takeover of a Television Licensee Company were this to be required in the public interest. A course of action open
CONFIDENTIAL