The Supreme Court issued its decision 24 April 2009 in annual accounts proceedings brought by the Netherlands Authority for the Financial Markets (AFM) against Spyker Cars N.V. (Spyker). In previous proceedings before the Enterprise Chamber the AFM had requested that the adoption by Spyker of its 2006 annual accounts be reversed and that Spyker be ordered to draw up new accounts in accordance with IFRS. The Enterprise Chamber rejected the AFM’s request, and the AFM appealed to the Supreme Court.
Judicial order to issuing institution
One of the elements of the AFM’s appeal was that the Enterprise Chamber should issue an order to the issuing institution on how to present its annual accounts if they do not meet one or more rules of the IFRS. The Supreme Court pointed out that the Enterprise Chamber did test Spyker’s annual accounts against the IFRS and the statutory provisions of Book 2 of the Dutch Civil Code. Despite some defects, the Enterprise Chamber decided that the annual accounts provided sufficient information and had not been prepared in breach of the IFRS. The defects identified by the Enterprise Chamber were not sufficiently serious to justify an order as requested by the AFM. The Supreme Court ruled that the Enterprise Chamber does have this discretion. It is not obliged to give this kind of order every time the IFRS are deviated from, if it concludes that a reasonable interpretation and application of IFRS regarding the annual accounts provides the requisite information and a true picture of the assets and liabilities and the results, even if the rules have not been (strictly) followed on a few (minor) points. The Enterprise Chamber did test all objections put forward by AFM against the standard that the information should provide sufficient information to give the user a sound view and enable the user to take economic decisions.
Position of accountant at the hearing
The AFM also argued on appeal that the Enterprise Chamber did not act correctly by failing to obtain the auditor’s testimony before the hearing of the case and examining him instead of during the hearing.
The Supreme Court considered that on the basis of the statutory provisions the auditor should indeed be heard at such a time as to allow the parties sufficient opportunity to respond to the auditor’s testimony. This does not, however, mean that the auditor can only be examined before the hearing of the case. The auditor has the right to attend the hearing. This can be useful in view of his knowledge about the accounts that he has audited. It is not clear why the independence of the auditor’s testimony would be affected by the fact that he heard the positions of the parties at the hearing before he testified.
The Supreme Court dismissed the AFM’s appeal.