The Gazette 1974

commerce in the six original Member States insist on approximation of company law. And it is for all these reasons that Article 54 para. (3) lit. (g) of the Treaty of Rome provides for the co- ordination of "the safeguards which, for the protection of the interests of members and others, are required by Member States of companies with a view to making such safeguards equivalent throughout the Commu- nity". It is to be stressed that approximation of national laws is not being treated as an end in itself and that long-standing legislation on important aspects of com- mercial life is by no means to be disrupted for the sake of an academic desire for uniformity. On the contrary, approximation of company law has an important part to play in ensuring the effective delivery of the econ- omic benefits that can flow from Community member- ship. The sooner we can adjust ourselves to the impor- tance of adopting a positive approach to this task the better it will be. Means of approximation Approximation is accomplished by directives issued by the Council of Ministers, the legislator of the Commu- nity. Directives are not company laws in the ordinary sense. Private parties cannot normally invoke them in disputes with corporations, or vice versa. Rather, direc- tives are directed to the Member States who are obliged to comply with a directive by transforming it into a national law. Thus, directives fix Community standards to which the national statutes must be adapted. There- fore, a directive is less rigid than a unitary federal law. Nor is a directive a uniform company law as used by the States of Australia, to be introduced in each Mem- ber State. The difference is that a directive is binding only as to the result to be achieved. A directive does not ask for the introduction of the same wording in the national acts. It is up to the national legislator how to implement a directive. Thus, each national legislator can adapt the law in a way which suits its legal system and corresponds to tradition. In a word: approximation (harmonisation, co-ordination) is not unification, nor does it mean uniformity. In instances where there is no need to introduce more than minimum standards, the directive will leave it to each Member State whether to maintain or to introduce stricter requirements. On the other hand, a directive with its minimum or fixed rules protects against exces- sive laxity. The present state of approximation So far, only one directive on companies has been enacted. Four others have been formally proposed by the Commission to the Council of Ministers for adop- tion. In addition, three or four further draft directives are being worked on by the staff of the Commission. The first companies directive sets up Community- wide minimum standards of protection for creditors and investors, dealing with the disclosure of documents and particulars to do with a company, and the validity of obligations entered into by a company, and the nullity of the company. This proposal was submitted by the Commission in 1964. In 1968 the Council adopted the directive. The second companies directive was submitted in 1970. It deals with incorporation requirements, with safeguards on the maintenance of share capital, and with increases and decreases of share capital. It fixes a minimum capital of 25,000 units of account for Sociétés

Anonymes and similar types of companies and contains strict rules on the purchase by companies of their own shares. The European Parliament and the Economic and Social Committee of the European Communities which represents business, workers' and consumers' inter- ests welcomed the proposal in their opinions. Since about one year and a half ago, a group of government and Commission representatives in the Council of Min- isters are discussing a version revised by the Commission on the basis of the opinions just mentioned. Difficulties have arisen over the Irish and British desire to exclude private companies entirely from the operation of the directive. The private company not have to include words in its name showing that h is different from a public one. In the other Memb e [ States this is obligatory for the "Société á responsabihte limitée" or its equivalent, and those words or a contrac- tion of them must form part of the company's name- Could this not be achieved for the private company by introducing a statutory classification of companies and by providing that a private company and a public company are to be separately distinguished by different designations in their names? The second point is that under the present laws a private company can be converted into a public com- pany simply by altering its articles of association and that there is no formal procedure under which the Registrar of Companies verifies that the company now conforms to the requirements applicable to a public company. Could this point not be met by providing that a private company wishing to become a public com- pany will in future have to change its articles, chang e its name, and comply with the minimum paid-up capital requirements applicable to a public company> and that the Registrar will have to issue a new certi- ficate of incorporation in the new name, and before doing so he would check that all the relevant documents had been received. These difficulties will doubtless be overcome soon» and it is significant in this respect that the Council 01 Ministers recently fixed December 31st, 1974, aS the latest date for the adoption of the second directive- The third companies directive deals with merger® between public companies taking place within a singl e Member State. The object of this directive is to provide equivalent guarantees throughout the Community to the shareholders, workers and creditors of merging com- panies. An important innovation will be that the work- ers of the two companies and their representatives m u s t be consulted before the general meeting takes a decision on the merger. The directive will introduce into a " national laws a common concept of merger. Under th e directive's definition a merger is the operation whereby a company, winding up without liquidation, transfer to another company all of its assets and liabilities, 111 consideration of which the bidding company assign® some of its own shares to the shareholders in the com- pany being wound up. In other words where a merg ef takes place, there is only one company which continue® to exist. Take-over bids do not come under the p r °' posal because in the case of a take-over, the absorber company continues to exist as a wholly owned subsi- diary of the bidding company. Belgium, France, the Netherlands, Britain and I f e ' land all have some form of public or private regulation of take-overs and other bids with a similar desire t0 protect investors and sometimes also workers. Since in Ireland, Britain and the Netherlands opei" a ' 180