CELEX: 51978PC0759
Language: en
Date: 1979-01-15
Title: Proposal for a COUNCIL DIRECTIVE on information to be published on a regular basis by companies whose transferable securities are admitted to officiai stock exchange listing (submitted to the Council by the Commission)

ARCHIVES HISTORIQUES
DE LA COMMISSION
COLLECTION RELIEE DES
DOCUMENTS "COM"
COM (78) 759
Vol. 1978/0276
 ---pagebreak--- Disclaimer
Conformément au règlement (CEE, Euratom) n° 354/83 du Conseil du 1er février 1983
concernant l'ouverture au public des archives historiques de la Communauté économique
européenne et de la Communauté européenne de l'énergie atomique (JO L 43 du 15.2.1983,
p. 1), tel que modifié par le règlement (CE, Euratom) n° 1700/2003 du 22 septembre 2003
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In accordance with Council Regulation (EEC, Euratom) No 354/83 of 1 February 1983
concerning the opening to the public of the historical archives of the European Economic
Community and the European Atomic Energy Community (OJ L 43, 15.2.1983, p. 1), as
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file have been declassified in conformity with Article 5 of the aforementioned regulation.
In Übereinstimmung mit der Verordnung (EWG, Euratom) Nr. 354/83 des Rates vom 1.
Februar 1983 über die Freigabe der historischen Archive der Europäischen
Wirtschaftsgemeinschaft und der Europäischen Atomgemeinschaft (ABI. L 43 vom 15.2.1983,
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 ---pagebreak--- COMMISSION OF THE EUROPEAN COMMUNITIES
                                               COM(78)759 final
                                               Brussels - 15 January 1979
                              Proposal for a
                             COUNCIL DIRECTIVE
         on information to be published on a regular basis by
         companies whose transferable securities are admitted
                   to officiai stock exchange listing / >^ χ
           ( submitted to the Council by the Commissions
C0M(78 ) 759   final .
 ---pagebreak---                                Explanatory memorandum
 INTRODUCTION
          Official stock exchanges are an element of primary importance in the
 capital markets of the Member States . This means that in promoting interpene­
 tration as between one EEC stock exchange and another , a significant step is
 taken towards the creation of a European capital market .
          Such interpenetrat ion presupposes that issuers from one Member State are
 able to become quoted on the official stock exchanges of one or more of the other
 Member States , without obstacles being placed in their way in the shape of
 differing rules and regulations . Interpenetration is made more difficult by
  differences in the rules and regulations applying to stock exchanges in the
  various Member States . It is with a view to reducing such differences and to
  achieving a first stage of coordination that the Commission has already foi–
  warded to the Council proposals for directives relating to the prospectus to
                                                                                      1
  be published when securities are admitted to official stock exchange listing
                                                                          2
   ^ nd to conditions of admission to official stock exchange listing . jhe
  nresent proposal represents an essential complement to these two proposals .
          It should be borne in mind that all three proposals are also intended
  to ensure that standards of investor protection and information are main­
  tained at a high and more uniform standard throughout the Community .
. v;:;                                     +
  ""k                                 +         +
     Original proposal of 5.10.1972 , modified on 8.12.1975 , OJ C 131 of 13.12.1972 .
  2.   .
     Original proposal of 30.12.1975 , modified on 3.11.1976 , OJ C 56 of 10.3.1976 .
 ---pagebreak---        The directive relating to the admission prospectus regulates on a
•■inimum basis information to be provided to investors at the moment when
securities are admitted to official quotation . The Commission considers it
essential to supplement this measure by providing to investors and to
ootential investors information about the issuers of such securities during
me entire period that the securities are admitted to quotation .
       At Community level , this second type of information is to be made
available as follows :
1.   By requiring quoted companies to make their annual accounts available
     to investors in the Member States where the securities are quoted ;
2.   by requiring information of an exceptional nature which is price-sensitive
     to be published as soon as possible after the event in question ;
3.   by providing that half-yearly reports relating to the business of quoted
     companies during the first six months of each of their financial years
     be published on a regular basis .
       The first two requirements mentioned above are already provided for
in the proposal relating to conditions of admission to official stock exchange
listing ;   the third requirement is dealt with in the present proposal .
       The principle of the obligation to publish regular information was
originally contained in the proposal relating to conditions of admission to
official stock exchange listing , the intention being to draw up a separate
proposal for a directive at a later stage containing detailed rules on this
subject . It appeared , however , that this approach would have caused diffi­
 culties in those Member States which do not as yet have a half-yearly reporting
 requirement - such Member States would have been obliged to introduce such an
obligation , but without knowing the content of the information that would be
 required later on . It was decided therefore to delete all references to
 continuing information from the proposal relating to conditions of admission ,
 and to deal with this topic entirely in the context of the present proposal .
 ---pagebreak---                                      - 3 -
 THE INDIVIDUAL ARTICLES
Articles 1 and 2
           The directive will apply to companies whose transferable securities
are officially listed on an EEC stock exchange . Companies are under a
particular obligation to keep the investing public informed as to their affairs
once they apply for their securities to be traded on an official market .
It should be noted that the directive will therefore also apply to companies
from third countries provided that their securities are listed within the
Community .
          The securities to which the directive will apply are shares , con­
vertible debentures , exchangeable debentures , debentures with warrants
attached , and participating debentures . This list does not include " normal "
debentures ; the holder of such a security is entitled to receive payment of
interest at fixed dates , and also to be reimbursed the capital sum at the end
of the period of the loan . Hence , it does not appear necessary to provide
such a debenture holder with regular information about development of the
company 's business . It should be borne in mind that the proposal for a directive
relating to conditions of admission obliges all listed companies , including
those having only "normal " debentures admitted to official quotation , to make
their annual accounts available to the public so that the holder of a " normal "
  ebenture will have access to the annual accounts , which appear sufficient
  o satisfy his information requirements .
          In the case of the other types of debenture mentioned in Article 1
it is considered that the debenture holder is really equivalent to a share-
 older , because the value of his security is more closely related to the
  rogress of the company 's business , and that he should therefore receive the
same information as shareholders .
 ---pagebreak---              The term "participating debentures" perhaps requires some
explanation : these debentures are encountered mainly in Belgium, and their
characteristic is that the amount of interest payable depends in whole or
in part on the results of the company .
             It should be noted that the directive will apply not only to companies
whose securities are listed after the date of its coming into force , but also
to all companies whose securities are already officially listed at that moment .
             Finally, the directive will not apply to companies which are invest­
ment companies of the open-ended type . Such companies will , in general , come
within the scope of the proposal for a directive relating to collective
                                                        1
investment undertakings for transferable securities , which provides particular
roles as regards information to be given to investors .
Article 3
             The directive represents only a first step on the road to harmonization
as it did not appear possible to achieve a greater degree of harmonization at
this stage . This being the case , the directive contains rules which are minimum
ones only . This means that Member States which wish to impose more stringent
rules on companies than those contained in the directive are free to do so .
As an example of this , the practice in the Federal Republic of Germany is to
publish at least two half-yearly reports each year - the directive requires
only a single half-yearly report during the course of the financial year.. The
directive will permit the German practice to continue . Again , in at least one
               ••
Member State , quoted companies are required to give net profit figures in
 their half-yearly reports - the directive contains a less stringent requirement
 in this connection ( gross operating result ) ,but will not prevent net profit
 figures from being continued to be given .
              Such more stringent rules must , however , be of general application
 for all companies , or for individual classes of companies , so as to ensure
 equal treatment for all companies, whether or not they be from the same Member
 State in which the securities are quoted .
  1
    Original proposal of 29.4.1976, modified on 9.6.1977, OJ C 171 of 26.7.1976 .
 ---pagebreak---                                                                                τ»
Articles 4 , 5 and 6
           The half-yearly report must relate to the first six months of the
company 's financial year ^ and be published no later than three months after
the end of the relevant period .
           It was not considered appropriate to require the publication of a
second six monthly report , because the annual accounts of companies generally
appear within a comparatively short period of the end of the financial year ,
and to require a second half-yearly report only a few weeks ahead of the annual
accounts might result in unnecessary duplication and confusion .
                                                                                           /
           The report is to be divided into two sections , firstly , figures of . a flnandsl
nature , set out 1n the form of a table , and secondly , an explanatory statement
which should permit investors to understand the true significance of such
figures, and generally to appreciate how the company 's business has fared
during the relevant period .
           It will be noted that the type of information required relates to the
 case of a typical industrial or commercial coup any . There is of course a wide
variety of other types of company quoted on the stock exchange ( banking and
 insurance companies , property companies , investment companies , etc .) for which
 the information required is not appropriate , It did not appear possible , at
 the present time , to draw up rules at Community level for each and every type?
of company ; at this stage it seemed sufficient to provide ( in Article 11(3 ))
that the competent authorities shall make suitable adaptations to the information
to be given . Article 11(3 ) does not permit any lessening of the standard of
 information to be given , but rather ensures that equivalent information is
provided , in accordance with the particular nature of the company concerned .
The Contact Committee     mentioned   in Article 12 could usefully discuss ways
 in which the directive is adapted in this way 1n the various Member States , so
that no undue divergences arise * The Commission could , in any event , return
to this subject at a later stage , and possibly provide specific rules for
 certain particular types of "issuer ( e.g. banks and Insurance companies).        '
 ---pagebreak---            The financial figures required in Article 5(2 ) are defined ( in
Article 6 ) by reference to terms used in the Articles relating to the layout
of the profit and loss accounts contained in the Fourth Council Directive on
the annual accounts of certain types of companies^. The reference to terms
used in the Fourth Directive is merely for definition purposes , so as to claril
the meaning of the requirements of the present directive .
The explanatory statement will in practice be the directors' responsibility to
establish , and its contents are dealt with in Article 5(4 ), including a list
of specific items which must in any event be mentioned , unless such information
is of minor importance only . In the latter case , it could be omitted under
Article 11(4 ) first hyphen .
           The definition of net turnover in Article 6 corresponds to Article 28
of the Fourth Directive mentioned above , but turnover attributable to the
sale of products and provision of services within a group of companies is to
be excluded .
Article 7
            It is considered that a breakdown of turnover by reference to branches
of activity and geographical market is a significant item of information which
should be made available to investors ; the present directive follows the Fourth
 Directive and the admission prospectus directive in this regard .
 Article 8
            This Article does not seek to impose any new obligation as regards
 consolidation of accounts , but rather provides that basically the same treat­
 ment shall be adopted for the half-yearly report as for the company 's annual
 accounts .
  Directive N° 78/ 660/ FEC - OJ L 222 of 14.8.1978
 ---pagebreak--- Article 9
              The intention is that the half-yearly information should be available
to the widest possible number of investors , whether they already hold securities
in the company or.,are merely prospective investors .
              Publication of the full half-yearly report in newspapers is generally
the rrcst immediate means of achieving this objective , but it should be noted
that it would also be sufficient to call the public 's attention to the
existence of the half-yearly report by a brief announcement in the press , which
would mention where copies of the report could be obtained .
              Copies of the half-yearly report must be supplied to the competent
authorities in each Member State that the securities are quoted , but this
does not imply that those authorities are responsible for checking the accuracy
of the information provided .
Article 10
              The directive does not require the half-yearly financial information
to be audited , but requires a statement to be included as to whether or not
an audit has been carried out , and if so , as to whether any qualifications
were made by the auditor .
Article 11
              Article 11(3 ) provides for the possibility of adaptations to be made
  o the requirements of the directive in accordance with the nature of the
. cmpany 's business ( see also the comments above relating to Article 5 ).
              It should be borne in mind that this Article is widely drafted and
dr,es not limit itself to the information required under Article 5 . An adaptation
   .j c-<l. for example be made to the requirement as to when the report has to be
published , or as to the period to be covered . This might , for example , be
roisssary in the case of a company whose business was of a seasonal nature ,
 ---pagebreak---                                     - 8 -
and for which the observance of the same rules as other companies would not
permit investors to have a satisfactory picture of the development of the
company 's business over the relevant period .
         Article 11(4 ) provides for a dispensation from the requirement to
publish information in the cases specified . Such a dispensation might operate
if the company could show , for example , that a breakdown of its turnover by
geographical market was unduly prejudicial to its interests , and that such
information was not essential to be given to investors .
Articles 12 , 13 and 14
         These are standard articles and call for no especial comment , except
for the requirement contained in Article 13(2 ).
         This provision is similar to Article 55(2 ) of the Fourth Directive
relating to the annual accounts of certain types of companies and provides for
a transitional period of one year for companies to adapt themselves to the
directive 's requirements , counting from the date that a Member State takes the .
measures necessary to comply with the directive , such date being at the latest
two years from the date of its notification . In other words , if a Member State
decides to comply with the directive at the expiration of a period of ( say )
18 months , it can provide that the provisions of the directive will not come
 into force until 1 year after the expiration of the 18 month period .
          The reason why this provision has been included is as follows :-
Article 5(3 ) and ( 4 ) provide that figures for the corresponding period in the
previous financial year must be given . Unless a transitional period is provided,
many companies would not have available figures relating to the previous financial
year when the directive comes into force . The transitional period is aimed at
permitting companies to have such figures available at that moment .
 ---pagebreak---                              Proposal for a Council Directive
     on information to be published on a regular basis by companies whose transfer­
     able securities are admitted to official stock exchange listing
    THE COUNCIL OF THE EUROPEAN COMMUNITIES ,
    Having regard to the Treaty establishing the European Economic Community ,
    and in particular Article 54(3)(g ) thereof ,
    Having regard to the proposal from the Commission ,
    Having regard to the opinion of the European Parliament ,
   Having regard to the opinion of the Economic and Social Committee ,
   Whereas the Sixth Council Directive                  of            concerning the
    content , checking and distribution of the prospectus to be published when
    securities issued by companies within the meaning of the second paragraph
   of Article 58 of the Treaty are admitted to official stock exchange listing ( 1 )
    seeks to ensure improved protection of investors and a greater degree of
    equivalence from country to country in the protection provided , by coordinating
    requirements as to the information to be published at the time of admission ;
    Whereas , in the case of securities admitted to official stock exchange listing ,
    the protection of investors requires that these latter be supplied with appropriate
    reqular information throughout the entire period during which the securities are
    listed ; whereas coordination of this regular information has similar objectives
    to those envisaged for the prospectus , namely to improve such protection
    and to make it more equivalent , to make securities more attractive to in­
     vestors , to facilitate the quotation of these securities on more than one
    stock exchange in the Community , and in so doing to contribute towards the
    establishment of a genuine Community capital market by permitting a fuller
     interpenetration of securities markets ;
    vine re as, under Council Directive             of            coordinating the
    -^nditions for the admission of securities to official stock exchange
     iistinq ( 2 ),quoted companies must at the end of the financial year make
        Mailable to investors their annual accounts and report giving information
'     4- ;.#y'
      j-i.f .
  .       r' .
               OJ No L
    itï OJ NO L
 ---pagebreak--- on the company for the whole of the financial year ; whereas the Fourth
Council Directive 7S/ 660/ EEC of 25 July 1978 (3 ) has coordinated tn. laws, regu­
lates and administrative provisions of the Member States concerning tne annual
accounts of certain types       of companies ;
Whereas the company should also , at least once during the financial year ,
make available to investors a report on the company 's business ; whereas the
present Directive can , consequently , be confined to coordinating the content
and distribution of a single report covering the first six fiionths of the
financial year ;
Whereas , however , in the case of ordinary debentures , because of the rights
they confer on their bearer , the protection of investors by means of the
publication of a half-yearly report is not essential ; whereas consequently
regular information needs to be coordinated only for companies whose shares ,
convertible debentures , exchangeable debentures , debentures with warrants
attached or participating debentures are admitted to official stock exchange
 listing ;
Whereas the half-yearly report must enable the investors to make an informed
appraisal of the general development of the company 's activity during the
period covered by the report ; whereas , however , this report need contain only
the essential details on the financial position and general progress of the
business of the company in question ;
Whereas coordination should be achieved by stages and should therefore be
 confined at present to the establishment of minimum rules ;
 Whereas , in order to take account of difficulties resulting from the current
 state of legislation in certain Member States , a longer period may be provided
 for companies to adapt themselves to the provisions of the Directive than
 that provided for the adaptation of national legislation ;
 Whereas , so as to ensure effective protection of investors and the proper
  operation of stock exchanges , the rules relating to regular information to be
  oubli shed by companies whose securities are admitted to official stock exchange
 ( 3 ) OJ No L 222 , 14.8.1978 , p. 11
 ---pagebreak---  Listing    within the Community should apply not only to companies from
Member States referred to in the second paragraph of Article 58 of the
" reaty , but also to companies from third countries ;
HAS ADOPTED THIS DIRECTIVE :
 ---pagebreak--- Section I : General provisions and field of application
Article 1
                                                               *
1.       This Directive shall apply to companies whose shares , convertible
debentures , exchangeable debentures , debentures carrying warrants or parti­
cipating debentures are admitted to official      listing  on a stock exchange
situated or operating within the territory of a Member State , whether such
securities themselves or certificates representing them are admitted and
whether such admission precedes or follows the date when this Directive enters
into force .
2.       This Directive shall , however , not apply to investment companies
other than of the closed-end type .
         For the purposes of this Directive , " investment companies other than
of the closed-end typ^' shall mean investment companies :
- whose object is the collective investment of capital provided by the public ,
   and which operate on the principle of risk spreading ;
   and
- whose units are , at the request of holders , repurchased or redeemed , directly
   or indirectly , as a charge on the assets of these companies .
          Action taken by a company to ensure that the stock exchange value
 of its units does not significantly vary from the net asset value shall be
 regarded as equivalent to such repurchase or redemption .
 ---pagebreak---                                                  - 2 -
     Article 2
                     The companies referred to in Article 1 shall publish , each financial
    year , a half-yearly report relating to their activity during the first six
    months of thei~> financial year .
    Arti c le 3
                     The Member States may make companies to which this Directive applies
    subject to more rigorous obligations than those contained in this Directive , or
    to additional obligations , provided that they are of general application for
    all companies or for individual classes of company .
    Section II : Publication and contents of half-yearly report
    Article A
                     The half-yearly report shall be published within three months of the
    end of the relevant six-month period .
. Article 5
    1.               The half-yearly report shall consist of figures and an explanatory
    statement relating to the company 's business during the relevant six-month
   period .
    2y.;'            The figures , presented in table form, shall show at least the
          1 lowing :
 'f.^fet turnover ;
   mother operating income ;
  ' t iîïiïv"'                                                     '                       '
   V^perating charges ;
   .1                operating resuit ;  :  • 1
    *$£p>terini dividends ( if any ) paid or proposed .
      t,' Ml' - 1.
                   ' Against each of the above figures , the figure for the corresponding
  ,sV >V- v
    period in the preceding financial year shalt also be shown .
 ---pagebreak--- 4.          The explanatory statement shall enable investors to make
an informed appraisal of the company 's business
during the relevant period and to make a comparison with the corresponding
period of the previous financial year . The explanatory statement shall relate
to the figures referred to in paragraph 2 and to at least the following items ,
giving supporting figures whenever appropriate :
- the number of persons employed ;
- investment carried out and decisions taken as to future investment ;
- state of the order book ;
- the general situation regarding stocks of finished products ;
- the degree of capacity utilization;
- any new products or activities which have had a significant effect on
   turnover .
Article 6
1.          For the purposes of this Directive :
- net turnover shall comprise the amounts derived from the sale of products
   and the provision of services falling within the company 's ordinary acti­
   vities , after deduction of sales rebates and of value added tax and other
   taxes directly linked to the turnover . Where the half-yearly report is drawn
   up on a consolidated basis , net turnover shall not comprise the sale of
   products and provision of services between companies forming part of the
   group ;
- other operating income shall comprise items 2 , 3 and 4 in Article 23 and
   their equivalents in Article 24 , and item 6 of Article 25 and its equivalent
    in Article 26 of the Fourth Council Directive of 25 July 1978 on the annual
   accounts of certain types of companies ;
 - operating charges shall comprise items 5 , 6, 7 and 8 in Article 23 and their
    equivalents in Articles 24 and items 2, 4 . and 5   of Article 25 and their
    equivalents in Article 26 of the Fourth Directive referred to above ;
 ---pagebreak---                                        _ L -
- gross operating result is the difference between ( a ) the net turnover to­
    gether with other operating income and ( b ) operating charges .
                                                 /
2.              In resoect of companies whose annual accounts do not have to be
drawn up in accordance with the Fourth Directive referred to above , the in­
formation defined in the second and third indents of paragraph 1 above shall
be established in an equivalent manner .
Art i c le 7
                Net turnover shall be broken down by categories of activity and
into geographical markets , in so far as , taking account of the manner in which
the sale of products and the provision of services falling within the company 's
ordinary activities are organized , these categories and markets differ
substantially from one another .
Article 8
1.             If the company prepares consolidated annual accounts only , the half-
yearly report shall be drawn up in consolidated form .
2.             If the company prepares both unconsolidated accounts and consolidated
accounts , the half-yearly report shall be drawn up in both forms . In that event ,
'owever , the competent authority may authorize the company to draw up the half-yearly
report either in unconsolidated or in consolidated form , provided that the
other form does not convey any significant supplementary information .
        cle 9
              The half-yearly report shall be published in one or more newspapers
distributed throughout the country or distributed widely , or in the national
(j.M^i.te , or shall be made available to the public either in writing in places
 ij|i|£ated announcements to be published in one or more newspapers distri-
          throughout the country or widely distributed , or by other equivalent
rr,e £<i$ approved by the competent authorities .
 ---pagebreak---                                                  v
                                    - 5 -
              If the transferable securities are admitted to official listing
in more than one Member State , the half-yearly report shall be published
simultaneously in each such Member State .
2.            The half-yearly report shall be published in the official language
or languages or in one of the official languages or in another language ,
provided that , in the State concerned , such official language or languages
or such other language are customary in the sphere of finance and are
accepted by the competent authorities .
3.            The company shall send a copy of the half-yearly report simultaneous­
ly , not later than the time of its publication , to the competent authorities
of each Member State in which the transferable securities are admitted to
official listing .
Article 10
              The half-yearly report must state whether the financial information
contained therein has or has not been checked by the official auditor of the
company 's accounts . If the auditor has made any qualifications , these must also
be stated .
Section III : Powers of the competent authorities
Article 11
          *
 1.          The Member States shall designate the national authority or
 authorities responsible for ensuring that the rules laid down in this Directive
 are applied . They shall inform the Commission accordingly , indicating , if
 appropriate , how duties have been allocated .
 2.          The Member States shall ensure that the competent authorities are
 invested with such authority and such powers as may be necessary for carrying
 out their task .
 3.           In cases where particular requirements of this Directive are in­
  appropriate to the company 's sphere of activity, the competent authorities shall
  ensure that suitable adaptations are made to these requirements .
 ---pagebreak---                                       - 6 -
 4.         The competent authorities may exempt the company from publishing any
information required by this Directive if they are satisfied that :
- such information is of minor importance only and is unlikely to influence
     assessment of t'he development of the company 's business ;
- disclosure of such information would be contrary to the public interest or
     seriously detrimental to the company , provided that , in the latter case ,
     non-publication is not likely to mislead the public with regard to facts and
     circumstances essential for assessment of the company 's transferable securities
     referred to in Article 1 .
5.          The provisions of paragraphs 3 and 4 shall also apply to the more
rigorous or additional obligations imposed pursuant to Article 3 .
 Section IV : Contact Committee
Article 12
            The Contact Committee established by the Council Directive
of             coordinating the conditions for the admission of securities to
official stock exchange listing shall also have as its function :
 ( a ) to facilitate , without prejudice to the provisions of Articles 169 and 170
  /■    of the Treaty , harmonized application of the Directive through regular
        consultations on any practical problems arising from its application , on
        which exchanges of opinion are deemed useful ;
'b >       facilitate the establishment of a concerted attitude between the Member
   Instates on the more rigorous or additional obligations which they may lay
      istown at purely national level pursuant to Article 3 ;
( cplto advise the Commission , if necessary, on any supplements or amendments
    ||»*p be made to the Directive .
 ---pagebreak---                                                  V
                                   - 7 -
 Section V ; Final provisions
Article 13
1.        Member States shall take the measures necessary in order to comply
with this Directive within two years of its notification and shall forthwith
inform the Commission thereof .
2.        The Member States may stipulate that the measures referred to in
paragraph 1 shall not apply until one year after the end of the period pro­
vided for in that paragraph .
3.       With effect from the notification of this Directive , Member States shall
communicate to the Commission the texts of the main laws , regulations and
administrative provisions which they adopt in the field covered by this
Directive .
Article 14
          This Directive is addressed to the Member States .
                                               Done at
                                                    For the Council
                                                    The President