The core of the legal aspects of the TVBS controversy are as follows. TVBS Inc owns the rights to operate the stations TVBS, TVBS-N and TVBS-G TV here in Taiwan. At present, the company's main shareholders are Bermuda TVB Investment Co, Ltd and its wholly owned subsidiary Countless Enter-tainment (Taiwan) Co, Ltd. Bermuda TVB holds 47 percent of the firm's shares, and Countless entertainment owns 53 percent, so together the two companies hold 100 percent of TVBS' shares.
Article 10 of Taiwan's Satellite and Broadcasting Law (
Further investigations show that at the beginning of the legislative process that shaped the law, the Cabinet was of the opinion that, "An appropriate introduction of foreign capital could lead to the upgrading of domestic technology, industry and skills. Furthermore, the use by foreign companies of proxies or re-investment to enter the domestic market could render regulations ineffective."
In other words, the Cabinet believed that foreign investment in satellite broadcasting should be fully deregulated, and that no restrictions should apply.
When that version was reviewed by the legislature, however, legislators believed that some restrictions should be applied. The result of negotiations was that, "Because the satellite and broadcasting industries have a major impact on the interests of society as a whole, these stipulations are made to avoid inappropriate interference, maintain media impartiality and independence, and to prevent market monopolization by foreigners."
At the third reading, minor changes were made to the text. The legislature was of the opinion that, "The satellite and broadcasting industries belong to the public. To prevent foreigners from monopolizing the market and [sacrificing] the development of the local satellite industry ... the proportion of shares that can be owned by foreigners in the satellite and broadcasting industry should be restricted. We do not agree with the Cabinet's version which says that no restrictions should be applied on foreign investment."
The result was that Article 10 was added to the law to restrict ownership by foreign investors.
The legislative history and aim of the law thus clearly shows that the phrase "directly held" in Article 10 is not meant to be understood in the most narrow sense of "direct foreign investment," but that it should include both direct and indirect foreign investment in the satellite and broadcasting industry.
If it is understood only in the most narrow sense, foreign companies would be able to use proxies or re-investment to invest in the local satellite and broadcasting industry. The article would thus be rendered ineffective, making us wonder why the legislature would add the regulation.
To sum up, Bermuda TVB Investment and its wholly owned subsidiary Countless Entertainment together own 100 percent of TVBS Inc, in obvious violation of the law. In accordance with Item 1, Article 38 of the Satellite and Broadcasting Law, the authority in charge should thus impose a fine on TVBS Inc, of between NT$200,000 (US$5,900) and NT$2 million, and notify the company to make corrections within a specified period of time.
The fine may be imposed again if the company fails to comply. Where the violation is serious -- and 100 percent foreign ownership should be considered serious -- the satellite broadcast permit may be revoked and the license of the domestic broadcasting business canceled.
Kao Tsung-liang is a lawyer.
Translated by Perry Svensson.
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