17
It is also recognized that one can gain control of a company by acquiring far less than 35% of its shares. In reality, in the case of a company the shareholding of which is scattered (e.g. HK-TVB Ltd.), a shareholder can be in a position of influence if he holds 10-15% of the shares in the company. The BA therefore recommends that an individual foreign person or company may not, directly or indirectly, control more than 10% of the shares in a licensee company. (Recommendation e(ii)).
18
The 2% approval rule (Recommendation e(iii)) can of Section 40(2A) of the which requires BA to be or more of the shares in a
be seen as a tightening up existing Television Ordinance notified if a person acquires 5% licensee company.
19
The
BA
on
has
recommendations
re-considered
whether
the
foreign ownership should be applied retrospectively and has recommended against it on the following grounds. Government was notified in April 1987 when BCIL acquired 26.77% of the shares in HK-TVB Ltd. and raised no objection since Government had no control over HK-TVB Ltd. If the recommendation that a licensee company should not be held by a holding company is accepted (recommendation (e)),
(e)), and should HK-TV B
HK-TVB Ltd. decide to become the licensee and re-allocate its shares in TVB Ltd. to its shareholders (or alternatively the current licensee, TVB Ltd., might allocate its shares to the shareholders of the holding company), BCIL would then be required to disinvest and probably incur substantial losses. Although the Attorney General's Chambers (AGC) has advised that Government would not be liable for compensation (paragraph 26 below), retrospective application of the rule would be contrary to normal practice.
20
Members will be aware that the public was warned on 24 November 1987 in a press release (attached to Annex I) that the Governor in Council was considering recommendations of the Broadcasting Authority relating to limitations on the direct or indirect ownership and control of the licensee companies, including ownership and control by holding companies and foreign interests. The BA therefore recommends that BCIL be required to reduce its shareholding in the licensee company to 26.77% (the position known to
to Government as at 24 November 1987) and
that should it sell any of the shares in future, company should not be permitted to rebuild it.
the