MUMBAI: The ministry of company affairs has not come out openly in support of the information and broadcasting ministry's contentions on Space TV.

Preferring to lob the ball back in the I&B's court without giving speicific directions, the former has, however, maintened that a clause on affirmative rights (to say 'yes' or 'no' to a board decision) of the minority shareholder in the joint venture could be contentious.

In its comment sent to the I&B ministry (reference: Serial No.R pages 1275/C; File 3/20/2005/CL-IInd), company affairs ministry has maintained except Section 2, dealing with affirmative rights of the minority shareholder, other issues raised by the I&B ministry don't cut much ice.

Space TV is a 80:20 joint venture between the Tatas and the Rupert Murdoch-controlled Star group.

With this, government sources pointed out, ministry of company affairs has submitted its comments on one of the two DTH applications, while it grapples with that of Sun TV's, which too has come under the government scanner.

Interestingly, various issues raised by the I&B ministry relating to Space TV and Sun's DTH applications were not brought up when pubcaster Doordarshan started its DTH service.

Technically speaking, some aspects of the DTH guidelines should have brought DD Direct Plus too under a cloud, including the fact that the service is wholly run and managed by a broadcaster, Doordarshan.

Meanwhile, ministry of company affairs does agree that the clause relating to the affirmative rights of Star Group - amounting to almost veto power regarding board decisions of Space TV - can be questioned.

According to Indian laws, a shareholder needs to have at least 26 per cent holding in a joint venture to have veto rights on board decisions. The affirmative rights clause in the Space TV shareholders' agreement is similar to this clause wherein the minority shareholder has the right to accept or refuse board decision with only 20 per cent stake.

The application of Space TV, envisaging setting up a Rs 16 billion DTH project in India, has been wandering around in the corridors of power in search of a clearance and letter of intent for over eight months now.

It is also learnt that Space TV has given an undertaking to the I&B ministry --- through voluminious clarifications sent earlier --- it would inform the government if changes in the shareholders' agreement take place.

I&B ministry could not be contacted for comments on the Space TV issue today despite repeated attempts.

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