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On May 14, the National/New Zealand First coalition government delivered its second budget. A NZ$2.8 billion (US$1.5 billion) government surplus was announced (well above the NZ$1.5 billion 1997-1998 forecast). However, the surplus for 1998-1999 is forecast to fall to NZ$1.3 billion. Other features of the budget were:

A judgment of a foreign court will not be recognized and enforced in Switzerland if it was made in disregard of a valid arbitration clause in place between the parties, as long as the defendant duly objects to the foreign court assuming jurisdiction, the Swiss Federal Tribunal recently ruled (Ruling 124 III 83).

The parliamentary committee reviewing the Swedish Companies Act published a report (SOU 1997:168) late last year on profit distributions. The report addresses the uncertainty as to whether profit distributions may be decided at extraordinary shareholders meetings and suggests that additional distributions may be decided after the annual general meeting. No advance distributions were proposed. The present veto of the board of directors was proposed to be abolished. Another proposal was to abolish the restriction on parent companies' right to distribute profits in excess of the free equity on the consolidated group balance sheet, leaving the parent company's own free equity freely distributable. However, the so-called prudence rule was kept, stating that a profit distribution may not be so high as to contravene generally accepted business practices in view of the company's or group's consolidation needs, liquidity or financial position. This rule was tightened by dropping the reference to business practice and making its application to any form of transfer of values to shareholders or others clear.

On January 1 1998, the new Law on Register Liens and the Pledge Register (Ustawa o zastawie rejestrowym i rejestrze zastawow) entered into effect. The Polish parliament followed the example of other (romanic) countries to establish a pledge registry and replace the pledging-privileges of Polish banks which lost effect on December 31 1997. Under the old Article 308 of the Polish Civil Code (Kodeks Cywilny), it was sufficient for the bank to register the pledge of an asset in its own register to establish a valid lien over movables in favour of a bank. The bank was then entitled to issue an enforceable title on its own behalf. These provisions were made invalid by the entry into force of the new statute.

One year after its enactment, Decree-Law 70/97 of April 3 (Netting Law) has fulfilled many of its expectations. A formidable increase in derivative documentation efforts clearly shows the renewed interest of derivatives transaction agents dealing with Portuguese residents to make use of the advantages arising from Portugal's entry in the netting jurisdictions' league.

The development of a well organized bond market depends on the controls guaranteeing the stability and correct functioning of the competitive mechanisms, the transparency of the determination of the prices and the protection of the saver-investor, among other things.

The new Act on Venture Capital Investments, Venture Capital Companies and Risk Investment Funds will come into force on June 16 1998.

On April 2 1998, the House of Representatives passed the new Patent Law 16(1)/98. The main provisions of the new law which are significantly different from the old law are as follows:

The proposed cut of the 1.5% stamp duty payable on credits granted by Finnish credit institutions will effect major changes on credit granting. Under the government bill, stamp duty will no longer be levied on loan agreements and mortgages. The amendment is proposed to be retroactive, enabling creditors to proceed an action ex post facto for the stamp duty paid in connection with the granting of the loan if the loan agreement has been signed on or after April 29 1998.

In September 1997, ABN AMRO launched a Fls2 billion securitization transaction. It was the first securitization originated by ABN AMRO and one of the first securitizations completed in the Netherlands. A portfolio of ABN AMRO-originated mortgage receivables was assigned to a special purpose vehicle named European Mortgage Securities IBV (EMS 1), established in the Netherlands. The shares in EMS 1 are held by Stichting European Mortgage Securities, also established in the Netherlands. EMS 1 issued four tranches of senior notes for an aggregate sum of Fls1.9 million and junior notes for an amount of Fls100 million. The senior notes were rated AAA by Moody's, AAA by Standard & Poor's and AAA by Fitch, and the junior notes A2 by Moody's, A by Standard & Poor's and A by Fitch.