TNAG-1817-FCO40-2578-Broadcasting-in-Hong-Kong-1988 — Page 304

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172435

MDHIAN 2474

ASSOCIATED COMPANIES, E.G. RECORDING COMPANIES.

4. IN THE EVENT, BOTH TVB AND ATV DEVISED CORPORATE STRUCTURES WHICH

GOT ROUND THE RESTRICTIONS BY ARRANGING FOR THE LICENSEE TO BE HELD

BY A HOLDING COMPANY, WHICH CAN CONTROL A NETWORK OF SUBSIDIARY

COMPANIES CONDUCTING BUSINESSES NOT DIRECTLY ASSOCIATED OR CONNECTED

WITH TELEVISION BROADCASTING. BECAUSE THE GOVERNMENT HAS NO CONTROL

OVER THE HOLDING COMPANY, SOME PROVISIONS OF THE TELEVISION ORDINANCE CAN BE AND HAVE BEEN CIRCUMVENTED AND THE ORIGINAL PURPOSE

HAS BEEN DEFEATED. THIS IS AGAINST THE SPIRIT OF THE POLICY AND

LEGISLATION AND DOES NOT ALLOW THE EFFECTIVE CONTROL BY THE

GOVERNMENT OF THE LICENSEE COMPANIES.

·

5. UNDER THE NEW LICENSING CONDITIONS AGREED BY EXCO ON 15 MARCH

1988 A LICENSEE COMPANY SHALL NOT BE HELD IN ANY FORM BY A HOLDING COMPANY, AND SHOULD NOT HOLD, DIRECTLY OR INDIRECTLY, SHARES IN ANY COMPANY CONDUCTING NON-BROADCAST BUSINESS. ANY SUBSIDIARY COMPANY HELD BY A LICENSEE COMPANY SHALL BE SUBJECT TO THE APPROVAL OF THE

BA.

6. THE NEW CONDITIONS ARE DESIGNED TO PLUG THE LOOPHOLE SO THAT

THE TELEVISION COMPANIES CANNOT BYPASS THE CURRENT LEGAL REQUIRE-

MENTS BY CREATING A HOLDING COMPANY ON TOP OF A LICENSEE COMPANY AND REAP PROFITS FROM SPIN-OFF ACTIVITIES UNDER THE UMBRELLA OF A

BROADCASTING FRANCHISE.

FOREIGN OWNERSHIP

7. THE PRESENT POSITION IS THAT NOT LESS THAN 51 PERCENT OF THE SHARES IN A TELEVISION LICENSEE COMPANY MUST BE HELD BY PEOPLE OF COMPANIES ORDINARILY RESIDENT IN HONG KONG. BECAUSE OF THE CORPORATE STRUCTURE DESCRIBED ABOVE, THIS RESTRICTION HAS BECOME MEANINGLESS BECAUSE THE HOLDING COMPANIES ARE NOT SUBJECT TO CONTROL. UNDER THE NEW CONDITIONS, AT LEAST 51 PERCENT OF THE ISSUED SHARES OF THE LICENSEE COMPANIES MUST BE HELD BY PERSONS WHO ARE HOLDER OF PERMANENT HONG KONG IDENTITY CARDS AND ARE ORDINARILY RESIDENT IN HONG KONG, OR BY COMPANIES CONTROLLED BY SUCH PERSONS. FOREIGN INTERESTS WILL BE ALLOWED TO OWN NO MORE THAN 49 PERCENT OF THE ISSUED SHARES. WHERE A FOREIGN SHAREHOLDER OWNS OR HAS INTEREST IN 2 PERCENT OR MORE OF THE ISSUED SHARES IN A LICENSEE COMPANY, THE LICENSEE SHALL FORTHWITH NOTIFY AND SEEK APPROVAL FROM THE BA, SUBJ- ECT TO THE PROVISO THAT NO MORE THAN 10 PERCENT OF THE ISSUED SHARES SHALL BE OWNED OR CONTROLLED BY ANY SINGLE FOREIGN SHAREHOLDER.

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