SINGAPORE - The Newspaper and Printing Presses Act (NPPA), which regulates the print media in Singapore, will apply to news entities under the new company to be set up after Singapore Press Holdings (SPH) restructures its media operations.
All of SPH's current management shareholders have also agreed to become founding members of the new company limited by guarantee (CLG), said Communications and Information Minister S. Iswaran on Monday (May 10).
He said: "This will ensure that our local news media will remain in the hands of trusted institutions with a long-term stake in Singapore.
"In due course, the membership will be expanded to include newer and more diverse institutions as stakeholders of the CLG."
The 1974 Act imposes restrictions on the ownership and control of local newspaper companies. Among other things, such firms are obliged to issue two classes of shares: ordinary and management.
While each ordinary shareholder can generally not hold more than 5 per cent of a newspaper company's shares, management shareholders have 200 times the voting power on resolutions relating to the appointment or dismissal of a director and any staff member of such companies.
The issuance of such shares is subject to government approval, with the intention that these shares are held by reputable and established institutions.
SPH management shareholders are OCBC Bank, Great Eastern, United Overseas Bank, DBS Bank, Singtel, NTUC Income, Temasek via Fullerton Pte Ltd, National University of Singapore and Nanyang Technological University.
Although the NPPA will apply to the new media company under the CLG - not the CLG itself - safeguards will be incorporated in the CLG's Constitution, he added.
These will ensure the company's structure achieves its purpose and fosters the objectives of the NPPA framework, and that its members and directors stay committed to Singapore's stability and success.
His ministry will lift shareholding controls imposed on the listed SPH entity after the restructuring, which is subject to shareholder approval, is complete.
The CLG must maintain "the reputation and high level of trust that SPH has built with generations of readers, domestically and internationally", he said. To ensure the CLG's long-term viability, the Government is ready to provide it with funding such as for digital innovation and capability development.
"The new media company must have a long-term, sustainable business model with different revenue sources - including traditional advertising and subscription revenues, complemented by government funding, and contributions from its management shareholders and benefactors as other components," he said.
The expectation is for the CLG to formulate detailed proposals on its strategic plan to build the business. These will form the basis for government funding and support.
During the debate, Workers' Party MP Leon Perera (Aljunied GRC) asked if the Government would consider a "light touch" in awarding NPPA licences to Singapore-owned companies which may want to enter the media space.
Responding, Mr Iswaran said the issue was not about whether or not NPPA restrictions exist. Instead, the current circumstances are a result of technological trends that have made the print media's business model more challenging.
"We have to look at it (from) an ecosystem perspective," Mr Iswaran said. "It's not about singularly pursuing one aspect, but it's (about) trying to ensure the overall local media grows and is able to hold its own vis-a-vis some of the broader competition it faces and the challenges we've talked about."
Management shares and CLGs
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.