Congress recently amended the Constitution to allow foreign investment in media companies, but a regulatory framework just published in draft form by the Communications Ministry proposes to subject all managerial appointments by radio and TV broadcasters to Government approval. In any event they must be Brazilian by birth or naturalized for at least ten years. The draft rules will apply to licensees governed by Law 4117/62 (the Brazilian Telecommunications Code). The ministry believes foreign managerial control must be averted even though the Constitutional amendment restricts foreign equity holdings to 30% of media companies. Overseas technicians will be allowed only with prior authorization. Imports of equipment and technology will be considered foreign capital if the Brazilian company doesn?t pay for them. These points are surprises but otherwise the draft is as expected, according to experts consulted by PAY-TV News. Foreign capital must be injected indirectly, i.e. via a company incorporated in Brazil. Changes in equity ownership are subject to prior authorization by the Communications Ministry and notification of Congress. The ministry, as well as civil and commercial registries, must be updated once a year on appointments to boards and executive committees. Another set of rules to be issued later will govern investment by pension funds and other institutional investors.
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