• Specific Year
    Any

BROADCASTING SERVICES ACT 1992 - SCHEDULE 1 Control and ownership of company interests

BROADCASTING SERVICES ACT 1992 - SCHEDULE 1

Control and ownership of company interests

Part   1 -- Introduction

 

1   Control--general

  (1)   This Schedule is intended to provide a means of finding out who is in a position to exercise control of commercial television broadcasting licences, commercial radio broadcasting licences, subscription television broadcasting licences, international broadcasting licences, newspapers and companies and a means of tracing company interests.

This Schedule recognises that the concept of control of a licence, a newspaper or a company can be a complex one.

The holding of company interests is not the only way to be in a position to exercise control. Clauses   2 and 3 set out the rules for deciding when a position to exercise control exists. While company interests may be important in deciding that question, they are only one issue. In some cases, it may be important to look at agreements and arrangements between people and at accustomed courses of conduct between people. In this respect, the definition of associate in section   6 of this Act is important.

A person who has company interests exceeding 15% in a company is regarded as being in a position to control the company.

Control of a company may also come about through company interests of 15% or less. This could happen where a person holds company interests of say 10% but no other person holds company interests of more than say 2% and those other persons do not act in concert.

A person may be in a position to exercise control of only the media activities of a licensee or a newspaper, but that position is nevertheless to be regarded as a position to exercise control of the licence or the newspaper.

  (2)   Because of the complexities involved in this area, it is not possible to provide rules which will give a definite answer in all cases. Therefore, the ACMA is given a monitoring role over the broadcasting industry and suitable powers of investigation in order to reach a conclusion as to whether a person is in a position to exercise control or not. In order to provide certainty for persons involved in those industries, the ACMA is also given, under section   74, a power to give a binding opinion on the question of control.

Part   2 -- When person is in a position to exercise control

 

2   When person is in a position to exercise control

  (1)   For the purposes of this Schedule, a person is in a position to exercise control of a licence or a company if:

  (a)   the person, either alone or together with an associate of the person, is in a position to exercise control of the licensee or the company; or

  (b)   in the case of a licence:

  (i)   the person is the licensee; or

  (ii)   the person, either alone or together with an associate of the person, is in a position to exercise (whether directly or indirectly) control of the selection or provision of a significant proportion of the programs broadcast by the licensee; or

  (iii)   the person, either alone or together with an associate of the person, is in a position to exercise (whether directly or indirectly) control of a significant proportion of the operations of the licensee in providing broadcasting services under the licence; or

  (c)   in the case of a non - licensee company--the person, either alone or together with an associate of the person, is in a position to exercise (whether directly or indirectly) control of a significant proportion of the operations of the company; or

  (d)   the person, either alone or together with an associate of the person, is in a position to:

  (i)   veto any action taken by the board of directors of the licensee or the company; or

  (ii)   appoint or secure the appointment of, or veto the appointment of, at least half of the board of directors of the licensee or the company; or

  (iii)   exercise, in any other manner, whether directly or indirectly, direction or restraint over any substantial issue affecting the management or affairs of the licensee or the company; or

  (e)   the licensee or the company or more than 50% of its directors:

  (i)   act, or are accustomed to act; or

  (ii)   under a contract or an arrangement or understanding (whether formal or informal) are intended or expected to act;

    in accordance with the directions, instructions or wishes of, or in concert with, the person or of the person and an associate of the person acting together or, if the person is a company, of the directors of the person.

  (2)   Paragraph   (1)(b) does not apply to the provision of programs by a person to a licensee under an agreement for the supply of programs to a licensee if the conditions of the agreement relate only to the programs so supplied or their promotion.

  (3)   An employee of a licensee or of a non - licensee company is not, except through an association with another person, to be regarded as being in a position to exercise control of a licence or a company under subclause   (1) purely because of being an employee.

  (4)   More than one person may be in a position to exercise control of a licence or a company.

  (5)   The following are examples of situations that, depending on the circumstances, may be relevant in determining whether a person is in a position to exercise control of 2 or more licences:

  (a)   the licensees share any or all of the following:

  (i)   equipment;

  (ii)   studios;

  (iii)   other production facilities;

  (iv)   transmission facilities;

  (v)   human resources;

  (vi)   other resources;

  (b)   the program content of a substantial percentage of the total number of hours of programs broadcast under one of those licences is the same as the program content of a substantial percentage of the total number of hours of programs broadcast under the other licence or licences;

  (c)   the licensees have financial relationships with each other;

  (d)   both of the following subparagraphs apply:

  (i)   the person is in a position to exercise control of one or more of the licences;

  (ii)   the person has a financial relationship with another person who is in a position to exercise control of the other licence or one or more of the other licences.

3   When person is in a position to exercise control of a newspaper

  (1)   For the purposes of this Schedule, a person is in a position to exercise control of a newspaper if:

  (a)   the person is the publisher of the newspaper; or

  (b)   the person is in a position, either alone or together with an associate of the person and whether directly or indirectly:

  (i)   to exercise control of a significant proportion of the operations of the publisher in publishing the newspaper; or

  (ii)   to exercise control of the selection or provision of a significant proportion of the material to be published in the newspaper; or

  (c)   if the newspaper is published by a company:

  (i)   the person is in a position, either alone or together with an associate of the person, to exercise control of the company; or

  (ii)   the person, either alone or together with an associate of the person, is in a position to veto any action taken by the board of directors of the company; or

  (iii)   the person, either alone or together with an associate of the person, is in a position to appoint or secure the appointment of, or veto the appointment of, at least half of the board of directors of the company; or

  (iv)   the person, either alone or together with an associate of the person, is in a position to exercise, in any other manner, whether directly or indirectly, direction or restraint over any substantial issue affecting the management or affairs of the company; or

  (v)   the company or more than 50% of its directors:

  (A)   act, or are accustomed to act; or

  (B)   under a contract or an arrangement or understanding (whether formal or informal) are intended or expected to act;

    in accordance with the directions, instructions or wishes of, or in concert with, the person or of the person and an associate of the person acting together or, if the person is a company, of the directors of the person.

  (2)   Subparagraph   (1)(b)(ii) does not apply to the provision of material by a person to a newspaper under an agreement for the supply of material of that kind if the conditions of the agreement relate only to the material so supplied.

  (3)   An employee of the publisher of a newspaper is not, except through an association with another person, to be regarded as being in a position to control the newspaper under subclause   (1) purely because of being an employee.

4   Special provisions for authorised lenders

  (1)   Subject to subclause   (2), if an authorised lender has a loan agreement with a media company:

  (a)   the agreement; and

  (b)   any other agreement or transaction that is:

  (i)   associated with the loan agreement; and

  (ii)   entered into in the ordinary course of carrying on a business of providing financial accommodation; and

  (c)   anything done under the loan agreement or under an agreement or transaction referred to in paragraph   (b), being a thing done in the ordinary course of carrying on a business of providing financial accommodation;

are to be disregarded in deciding whether the lender or any controller of the lender is in a position to exercise control of the media company or of any licence or newspaper of which the media company is in a position to exercise control.

  (2)   Subclause   (1) does not apply in relation to being in a position to exercise control of a licence if the lender or a controller of the lender:

  (a)   prevents the licensee from complying with a condition of the licence; or

  (b)   controls the selection or provision of any of the programs to be broadcast by the licensee; or

  (c)   appoints or secures the appointment of at least half of the board of directors of the licensee; or

  (d)   vetoes the appointment of at least half of the board of directors of the licensee otherwise than:

  (i)   under a loan agreement or an agreement or transaction referred to in paragraph   (1)(b); and

  (ii)   in the ordinary course of carrying on a business of providing financial accommodation.

  (3)   Subclause   (1) does not apply in relation to being in a position to exercise control of a newspaper if the lender or a controller of the lender:

  (a)   controls the selection or provision of any of the material to be published in the newspaper; or

  (b)   appoints or secures the appointment of at least half of the board of directors of the media company that publishes the newspaper; or

  (c)   vetoes the appointment of at least half of the board of directors of the media company that publishes the newspaper otherwise than:

  (i)   under a loan agreement or an agreement or transaction referred to in paragraph   (1)(b); and

  (ii)   in the ordinary course of carrying on a business of providing financial accommodation.

  (4)   In this clause:

"authorised lender" means:

  (a)   an ADI (authorised deposit - taking institution) within the meaning of the Banking Act 1959 ; or

  (b)   a corporation formed under the law of a State or Territory to carry on the business of banking within Australia; or

  (c)   a corporation whose sole or principal business is the provision of financial accommodation to other persons, being a corporation:

  (i)   that is a registered entity under the Financial Sector (Collection of Data) Act 2001 ; or

  (ii)   in respect of which a declaration under subclause   (5) is in force; or

  (iii)   in respect of which an application for such a declaration has been made but not finally disposed of.

"controller" , in relation to an authorised lender, means a person who is in a position to exercise control of the lender.

"loan agreement" , in relation to a company, means an agreement entered into in the ordinary course of carrying on a business of providing financial accommodation under which:

  (a)   financial accommodation is provided to the company; or

  (b)   money is deposited with the company; or

  (c)   a debt or liability (whether or not financial) of the company arises;

whether or not:

  (d)   the financial accommodation, money, debt or liability is secured; or

  (e)   money payable by the company under the agreement is presently payable; or

  (f)   liability arising under the agreement is unconditional.

"media company" means:

  (a)   a company that holds a commercial television broadcasting licence or a commercial radio broadcasting licence; or

  (b)   a company that holds a subscription television broadcasting licence; or

  (ba)   a company that holds an international broadcasting licence; or

  (c)   a company that publishes a newspaper; or

  (d)   a company that is in a position to exercise control of such a company.

  (5)   The ACMA may, in writing, declare a corporation (whether formed inside or outside Australia) whose sole or principal business is the provision of financial accommodation to other persons to be an authorised lender for the purposes of this clause.

Part   3 -- Deemed control

 

5   Explanation of examples

    In an example in this Part, a percentage written next to an arrow indicates that the person before the arrow has company interests in the company to which the arrow is pointing which exceeds that percentage.

6   The 15% rule

  (1)   If a person has company interests in a company exceeding 15%, the person is to be regarded as being in a position to exercise control of the company.

7   Application of method through chain of companies

    The method described in clause   6 can be applied in the case of a chain of companies. Where a company interest of more than 15% is maintained throughout the chain, the person is to be regarded as being in a position to exercise control of the last company in the chain.

    Example:

An example which sets out a person who has a 15% company interest in company A, which in turn has a 15% company interest in company B, which in turn has a 15% company interest in company C, which in turn has a 15% company interest in company D

    Here the person is to be regarded as being in a position to exercise control of Company D.

Part   4 -- Tracing of ownership

 

8   Tracing of ownership

    Company interests can be traced through a chain of companies using a method known as the fractional tracing method. This method applies a formula to decide what company interest a person has.

This method is best demonstrated by an example.

    Example:

An example which sets out a person with a 30% company interest in company A, which in turn has a 10% company interest in company B

    The person's company interest in Company B is worked out using the formula:

Start formula Company Interest 1 times Company Interest 2 end formula

where:

"Company Interest 1" is the company interest of the person, expressed as a fraction, in Company A.

"Company Interest 2" is the company interest of Company A, expressed as a fraction, in Company B.

In this case, the formula produces: 3/10 X 1/10, which means that the person has a 3% company interest in Company B.

Interests traced in this way can be added. If Company B is a licensee and the person had, through other chains of companies, a further 12.5% company interest in Company B, the person would be regarded as being in a position to exercise control of Company B under Part   3 of this Schedule because the person would have company interests exceeding 15% in Company B.

Example:

 

An example which shows how company interest determined through the fractional tracing method can be added together

    In this example, the person has a 15.5% company interest in Company B. This is made up of 3% (through Company A), 8% (through Company C) and 4.5% (through Company D).

This method of tracing ownership may be used through any number of companies. However, the ACMA is not required to trace every minor company interest.

Download

No downloadable files available