1 Committee for Invisible Transactions, Organization for Economic Co-operation and Development, Capital Markets Study (1967).

2 EEC, The Development of a European Capital Market (1966).

3 17 C.F.K. §§230,253; 230.257 (Eules 253, 257—1933 Act Eegulations) provide special limitations on the amount of offering and use of offering circular for companies which have not shown net income for at least 1 of the last 2 fiscal years prior to the offering.

4 Securities Act of 1933, 48 Stat. 74, as amended, 15 TJ.S.C. §78a-aa (1964). Form S-7 provides a shorter registration statement and prospectus for certain issuers qualifying on the basis of (1) gross revenues, (2) net income, (3) dividend payments, and (4) lack of any default on outstanding indebtedness.

5 Companies Act, 1948, 4th Schedule, 11 & 12 Geo. 6 c. 38 (Companies Act). Eules and Regulations of The Stock Exchange, The Council of the Stock Exchange London, App. 34.

6 London Stock Exchange Eules, App. 34, Schedule II Part A, 17 require, “whenever possible a statement showing the sales turnover figures…. ” In practice this information is rarely given in meaningful form.

7 Royal Decree No. 185, Title II, Art. 27, July 9, 1935. Moniteur Beige, July 10, 1935.

8 Statistics Relating to Securities Quoted on the London Stock Exchange—For year ending March 31, 1966, p. 5.

9 SEC Annual Beport 26 (1967).

10 There are virtually no formal regulations or forms published by the Commission Bancaire. The principal sources of information concerning actual operations are its annual reports.

11 In June, 1966, the London Stock Exchange published Admission of Securities to Quotation—Memoranda of Guidance and Eequirements of the Federation of Stock Exchanges in Great Britain and Ireland: (The Yellow Book). This is a compilation of the stock exchange rules concerning listing requirements and some explanatory material. The Introduction to App. 34 which gives the requirements for quotation (under London Stock Exchange Eules, Eule 159 (2)) states the following: “The requirements are not exhaustive and the Committee may add thereto or subtract therefrom in any particular case, as a variety of conditions may exist which require ad hoc decisions by the Committee.'

12 Commission Bancaire, Bapport Annual, 1960, pp. 102-106. See also D. Pomlot, Le Statut Legal des Banques et Le Controle des Emissions de Titres et Valeurs 202 (Brussels, 1958).

13 Admission of Securities to Quotation 7 (1966). See also Stock Exchange Eules— App. 34, Schedule VIII, A.B.

14 See generally Folk, “Corporation Statutes 1959-1966,” 875 Duke Law Journal (1966).

15 The major U.K. accounting organization is the Institute of Chartered Accounts in England and Wales. The organization plays a role similar to the American Institute of Certified Public Accountants in the United States.

16 In Belgium recent legislation has been proposed to establish accounting standards and principles, and to place the reviseurs d'entreprise under Commission Bancaire supervision.

17 Gower, The Principles of Modern Company Law 269 (2nd Ed. 1957). See also Great Britain Board of Trade, Company Law Committee Eeport (Jenkins Report) pars, 11, 225, 227 (1962).

18 Kellett, The Merchant Banking Arena (1967).

19 The attorney would be involved if corporate articles needed mending, or if some special problem were involved.

20 The application for a quotation must be signed by a broker, London Stock Exchange Rules, App. 34, Sec. A, Part I, III (A). Communications between the Stock Exchange and the Company usually go through the sponsoring broker.

21 In all three countries enforcement is primarily through the informal sanctions of threat of delay and publicity. There are practically no eases in Belgium and the United Kingdom, and relatively few stop orders in the United States.

22 See discussion in Knauss, “ A Eeappraisal of the Kole of Disclosure,” 62 Mich. Law Eev. 607, 616-620 (1964).

23 Royal Decree No. 71, Arts. 2, 3, November 30, 1939.

24 Prevention of Fraud (Investments Act 1939, as amended 1958). Arts. 2, 6, 7 Eliz. 2 c. 45.

25 London Stock Exchange Rules, Rule 78.

26 London Stock Exchange Rules, Rule 172 and App. 36.

27 Minutes of Evidence, Company Law Committee (Jenkins Committee) 1554-1556 (1960-61).

28 Brokers on the London Exchange are required to report their total trades in six oroad categories of securities. There is no official information on trading in individual securities.

29 Both the New York and American Stock Exchanges use computers to check on unusual price or volume fluctuation in securities being traded. Daily reports are sent from the stock exchanges to the SEC. London Stock Exchange Rules, Rule 736 Forbids promotion of a “false Market.” A few instances of discipline by the Stock Exchange have been reported in recent Annual Reports.

30 The full text of the new rules was printed in the Financial Section of the London Times, March 29, 1968.

31 Companies Act 1948, Part IV 195, 198. See also, London Stock Exchange Rules, App. 34, Schedule VII A.7 ( a ), Requirement to Make Director Transactions Public.

32 Ibid. General Undertaking of Companies A, 4.

33 OECD Capital Markets Study pp. 93, 94.

34 See papers delivered in symposium on Economic Policy and the Eegulation of Cor- Iorate Securities (to be published). Symposium Sponsored by The American Enterprise Institute and The National Law Center, George Washington University. March 7-8, 1968.

35 OECD Capital Markets Study p. 215, par. 264, Segre Eeport pp. 225-234.

36 The reluctance of most institutional investors in the United States to invest heavily in European Companies (even prior to the balance of payments limitations, and the Interest Equalization Tax) may be explained by their concern about the lack of adequate information.

37 In many respects the financial press in the United Kingdom plays a more important disclosure and regulatory role than in the United States. It appears more willing to comment on the internal affairs and financial reports of companies.

38 The London Exchange does this to a certain extent through its subsidiary. The Exchange Daily Statistic Service.

39 OECD Capital Markets Study, pp. 184-187, pars. 140-144.

40 Fact Book, New York Stock Exchange (1967).

41 Eeport of Special Study of Securities Markets of the SEC, H. E. Doc. No. 95, 88th Cong., 1st Seas. (1963).

42 OECD Capital Markets Study, p. 156, par. 51; p. 195, par. 169; p. 216, par. 262.

43 See recent suggestions for reform in Schneider, “Eeform of the Federal Securities Laws,” 115 TJniv. Penn. Law Eev. 1023 (1967); and Cohen, “Truth in Securities Bevisited,” 79 Harvard Law Eev. 1340 (1966).