Under the Newspaper and Printing Presses Act, newspaper companies like Singapore Press Holdings (SPH) and the new company limited by guarantee (CLG) that will take over SPH's media business are obliged to issue management shares.

These shares give management shareholders 200 times the voting power of an ordinary shareholder on resolutions relating to the appointment of directors and staff of such companies.

The issuance and transfer of these shares are subject to the approval of the Minister for Communications and Information.

SPH's current management shareholders are OCBC Bank, Great Eastern, United Overseas Bank, DBS Bank, Singtel, NTUC Income, Temasek via Fullerton Pte Ltd, the National University of Singapore and the Nanyang Technological University. All of them have agreed to be the founding members of the new CLG.

CLGs are entities that do not have share capital or shareholders, but instead have members who act as guarantors of the company's liabilities.

They are usually formed to carry out non-profit-making activities of public or national interest, and are not necessarily charities.

Some notable CLGs include the universities, The Esplanade and Gardens by the Bay.

The new CLG will operate as a revenue-seeking business, subject to commercial discipline.

However, any operating surplus will be ploughed back into the media business to reinvest in the company and its people, rather than distributed to shareholders as dividends. In this sense, it will be "not-for-profit" to its members.

CLGs have a corporate status and have to be registered with the Accounting and Corporate Regulatory Authority like other business entities and be governed by the Companies Act.

They are also liable to pay corporate tax and may qualify for tax deductions or exemptions.

The CLG structure will also allow SPH Media to seek funding from both public and private sources with a shared interest in supporting quality journalism.

Rei Kurohi