The Gazette 1974

make decisions providing for the abolition or the sup- pression of such aid schemes and the laying down the time table for such action. That is to say we have an example of a Treaty pro- vision where the interdiction was not of itself suffi- ciently precise and where its operation required the intervention of a Community institution. The situation, of course, may be very different if there has been intervention by, say, the Commission. It would then be for the national Judge to read the relevant regulation together with the Treaty in order to decide whether there was a prohibition sufficiently precise for him to see whether or not there had been non- compliance. [to be continued]

On being asked whether this provision produced direct effects which could be invoked in national pro- ceedings, the Court held that the terms of Article 92 (1), which contained the declaration of incompatibility, were intended to take effect in the legal systems of Member States only when they had been put in concrete form by acts having general application of the Commis- sion or Council, as provided for in subsequent articles of the Treaty. Here, in contrast to the foregoing examples, was a situation where the incompatibility of the aids with the Common Market depended on an elaborate assessment of the many conditions and exemptions mentioned in Article 92. Moreover, it is only after reading the whole of the section on aids that it becomes clear that it is for the Commission or Council to adopt legislation or

Creating a Common Market for Companies Part II By DR. IVO E. SCHWARTZ, LL.M.

Part II of a lecture delivered by Dr. Schwartz, who is Director for Approximation

of Laws: Companies

and

Firms, Public Contracts, pean Communities, "Gazette " pp. 178-181.

Intellectual

Property, Fair Competition, General Matters, Commission of the Euro-

Brussels. The lecture was given in Wexford on 9 March 1974. Continued from

July-August

above the minimum laid down in the Directive, if the figures provided did not amount to a "true and fair view". Greater flexibility would also now be allowed in the lay-out of accounts. Additions have been made to the general principles of valuation listed in the Directive, so as to take account of current practice in the United Kingdom and Eire. The amended version also offers a much-wider scope for using new valuation methods, such as those allowing for the effects of inflation. Following the British example, the Commission also wants now information on net turnover to be accom- panied by an indication of the contribution of the company's different commercial and industrial activities to the turnover and to the year's results. The amended Directive is thus largely an amalgam of both continental and British and Irish best accounting practices. However, it maintains the earlier Directive's insis- tence on a strictly schematised presentation of accounts, as against the flexible current British and Irish approach. It remains to be seen when the Council's heavily charged groups of government representatives will find time to start the discussion of the Commission's pro- posal. The 31st of December 1975 has been fixed by the Council as deadline for the adoption of the Directive. When a company belongs to a group, only the pre- sentation of consolidated accounts can give a true and fair, as well as a complete view of the situation of the companies concerned. Therefore the Commission has committed itself to submit a proposal for a Directive on consolidated accounts of groups of companies not later than next year. At the same time, we are working on 199

A truly European industry must depend on a Euro- pean capital market, and funds will only be tempted across national boundaries on a larger scale if the methods of presentation of the financial state and per- formance of companies are more strictly comparable. Thus the demand for European methods of accounting is a strong one. In a common market with characteristics similar to those existing in a national market it is also nccessary to establish throughout the Community equi- valent legal requirements as regards the extent of the financial information that should be made available to the public by companies that are in competition with one another and have the same legal form. Moreover, insufficient disclosure requirements in some of the Member States do not favour rationalisation and will not strengthen the competitiveness of the com- panies concerned in those countries. The Fourth Directive Thus the Fourth Company Directive regarding the annual accounts of limited liability companies is of considerable importance. The proposal dates from 1971 but has been amended in February 1974 to take into account the situation in the new Member States and the opinions delivered by the European Parliament and the Economic and Social Committee which highly welcomed the Commission's proposal. The main changes include a clear statement that accounts shall give "a true and fair view" of the com- pany's assets, liabilities, financial position and results— a principle on which British and Irish accountants had strongly insisted. It implies that limited companies would be legally obliged to provide additional information, over and