REPORT OF THE COUNCIL OF MINISTERS ON THE MANX RADIO TRUST -----0000000----- March 1995 Price: £2.60 REPORT OF THE COUNCIL OF MINISTERS ON THE MANX RADIO TRUST To: The Hon Sir Charles Kerruish, OBE, LLD (hc), CP President of Tynwald, and the Honourable Council and Keys in Tynwald assembled. 1. In February 1994, the report of the Committee of Inquiry into the Options for the Future of Manx Radio, with the initial response and proposals by the Council of Ministers, was placed before Tynwald for approval. Paragraph 7 of the report from Council, which accompanied the report of the Committee of Inquiry, stated that:- "The Council of Ministers, in response to the Committee of Inquiry into the Options for the Future of Manx Radio proposes as follows:- (1) that the main recommendation in the report, that Radio Manx Limited should remain in Isle of Man Government ownership, be accepted. (2) that the recommendations dealing with:- protecting the public service element of the Station's output, drafting a Charter and Promise of Performance, establishing a non-profit seeking Trust to run the Station, the reporting structure between the radio station and Government, Government's financial support for the radio station be examined by the Council of Ministers in consultation with the Directors of Radio Manx Limited with a view to detailed recommendations being placed before Tynwald. (3) that the remaining recommendations, subject to any variation that may be necessary, arising from the preceding proposal, be broadly accepted and implemented". 2. At its sitting on 16 February 1994, the following amended motion was approved:- "that the report of the Committee of Inquiry into the Options for the Future of Manx Radio be received and that the proposals of the Council of Ministers, in respect thereof be approved, provided that any changes affecting the matters identified in paragraph 7(3) of the initial response and proposals of the Council of Ministers shall be subject to the approval of Tynwald Court". 3. Following on from Tynwald's approval of the Council proposals. detailed consideration was given to the 6 outstanding recommendations of the Committee of Inquiry and this was done in consultation with the Directors of Radio Manx Limited after having taken advice from the Attorney General, the Communications Commission and the Treasury. The 6 outstanding recommendations referred to above were:- "i) The public service element of the Station's output should be protected. ii) A Charter and Promise of Performance should be drafted laying down the minimum programming requirements, both to be reviewed every 8-10 years. iii) A non-profit seeking Trust should be set up to run the Station as a company limited by guarantee. iv) The reporting structure between the radio station and the Isle of Man Government should be reviewed. v) The Committee does not believe that sufficient potential advertising revenue exists to fund the current level of public service output without Government and support; and vi) The subvention should be continued and the amount reviewed every five years. Inflationary increases should be accommodated. A single payment grant should be made to bring the Station's technical facilities up to standard". 4. In July 1994, Tynwald approved the report of the Council of Ministers on the outstanding recommendations of the Committee of Inquiry into the Options for the Future of Manx Radio and in that report was set out a summary of the recommendations of the Committee of Inquiry together with the recommendations of the Sound Broadcasting Committee. This summary is set out below:- SUMMARY OF RECOMMENDATIONS RECOMMENDATION OF THE RECOMMENDATION OF THE SOUND COMM TTEE OF INQUIRY BROADCASTING COMMrTTEE Recommendation (i) - Agreed. "The public service element This will be done via the Promise of of the Station's output Performance, the licence to broad- should be protected". cast and the Trust Deed Recommendation (ii) - Agreed to a Promise of Performance "A Charter and Promise of with a facility for review every 4 years. Performance should be drafted A Charter not considered to be laying down the minimum necessary. programming requirements. Both to be reviewed every (Note: Further consideration 8-10 years" suggests that the review period of the Promise of Performance should correspond to the period of the licence). Recommendation (iii) - Agreed to the setting up of a Trust "A non-profit seeking Trust but disagreed with the need for it to should be set up to fund the be non-profit seeking. Also Station as a Company limited disagreed with the need for a by guarantee" company limited by guarantee. Recommendation (iv) - Agreed. This will be modified as a "That the reporting structure result of the Trust. between the radio station and the Isle of Man Government should be reviewed" Recommendation (v) - "The Committee does not believe Agreed that sufficient potential advertising revenue exists to fund the current level of public service output without Government support; and The subvention should be Agreed and increased from £180,000 continued and the amount to £200,000 with effect from 1994/95. reviewed every five years. Thereafter indexed to allow for Inflationary increases should increases. be accommodated". Recommendation (vi) - Agreed, via an increase in share "A single payment grant should capital which will provide the be made to bring the Station's company with approximately technical facilities up to £196,000 over a two year period standard" commencing in 1995. 5. Following on from the approval of the Council of Ministers report at the July 1994 sitting of Tynwald, work was undertaken developing the proposed Trust Deed and amended Articles of Association in conjunction with the Directors of Radio Manx Limited and, at the same time, Members of Tynwald were invited to suggest suitable persons to become Trustees of the Manx Radio Trust. Following on from an assurance given by the Chief Minister during the debate on this issue at the July 1994 sitting of Tynwald, a meeting was held with Members of Tynwald on Friday, 10 February, when the Chief Minister, Attorney General and Chief Financial Officer explained to Members the main provisions of the Trust Deed and the changes necessary to the Articles of Association of Radio Manx Limited. A copy of the proposed Trust Deed is attached at Appendix A and has been arrived at following on from discussions with the Directors of Radio Manx Limited who have indicated that they are content with its provisions and also includes a number of amendments suggested by Members at the briefing that was held on Friday, 10 February 1995. 6. The background to the proposed Manx Radio Trust is as follows:- (a) The purpose of the proposed Trust is to grant to a body of persons, independent from the Government, the power to exercise day to day control over the shares of Radio Manx Limited whilst keeping beneficial ownership of the shares with the Government (le the Treasury) and ensuring that the Government can, at any time, recover these shares and/or exercise complete control over them This body will be expected to use its powers so as to attain the objects set down for it. (b) Corporate and Trust structural options There are 3 means by which such a body could be constituted. Firstly, by the incorporation of a company limited by guarantee, the Treasury being the sole member of the company and the proposed Trustees of the Trust, acting instead as the Directors or Governors of the Company. Secondly, by the creation of a Trust under which the Trustees are under a positive obligation to promote the objects. Thirdly, by the creation of a bare Trust in terms of the beneficial interest but under which the Trustees are given various powers which they could use to promote the objects. The guarantee company option would not satisfy the objectives, for such a company's activities would, to a degree, be public, as with any other type of company. In addition, the duty of its directors would be owed to the company itself (not, say, the public) and, for all intents and purposes, that company would be the Treasury, thus diminishing the separation from Government, which it at the heart of this exercise. The second option involves the establishment of a purpose Trust. It is not possible to create a valid purpose Trust under Manx law. All Trusts must have a beneficiary capable of enforcing the Trustees obligations. In addition, such Trusts carry complications in relation to the perpetuities rules and the requirement of certainty. Such a Trust would, therefore, require a special statute to be passed providing for its validity. The "bare Trust" route is considered to be the simplest means of achieving the objectives and this is the form which the proposed Trust takes. The effect of it is to grant to the Trustees various powers over the shares of Radio Manx Limited (hereinafter called "the Company"). The principle power will be to vote the shares. That means the Trustees will be able to control (and thus influence) the Board and also to control those matters affecting the Company which are not within the Board's control. Among these will be powers relating to borrowing and the issue and transfer of shares. As it is simply a grant of powers, the problems concerning purpose Trusts will be avoided. However, the consequence of this is that the arrangement will be entirely permissive. The Trustees will be under no positive duty to exercise their powers but, as the powers are held in a fiduciary capacity, if the Trustees do decide to act they must exercise reasonable care in doing so and must act only for the purposes for which the powers have been granted.