Assessing Control of the Noncommercial Broadcaster - FCC Looks to Board of Directors

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How do you determine who is control of a noncommercial broadcaster governed by a self-perpetuating Board of Directors? That question was addressed in a recent FCC decision, dismissing an application for a new noncommercial FM station that had not properly disclosed its owners on its FCC Form 340 application. In that case, the applicant had reported to the FCC that it was controlled by one individual, the head of a Monastery. No other officers or directors or members of the applicant nonprofit corporation were listed in the application. A competing applicant searched state records, and determined that its articles of incorporation reflected that the applicant was to be governed by a Board of Directors, and required at least three directors. Moreover, the state filings had listed 6 directors - including two individuals who were not US citizens. When challenged, the applicant admitted that the applicant corporation was set up in the manner set out in the state filings, but contended that the directors were all members of the same religious order, and could not challenge the decisions of their superior - arguing that this gave the superior effective control over the entity. The FCC rejected the argument - relying on state laws that said that a company is governed by its Board of Directors - and concluding that the individuals on that board therefore had control of the applicant. Any attempt to now list the 5 other members on the FCC application would be a major change in the control of the board (and would raise alien ownership issues because of the two directors who were not US citizens), so the application was dismissed.

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Published In: Business Organization Updates, Communications & Media Updates, Nonprofits Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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