On the penalty box of the Amsterdam Stock Exchange

2023-05-20 12:53:12

DOutside on the stock exchange, the focus is on the large companies in the leading index AEX: Above the entrance to the Amsterdam Stock Exchange, at Beursplein 5, a light strip runs from right to left with the current prices of the 25 most important stocks. Name, ticker symbol, current price – from “A” like ABN Amro to “W” like Wolters Kluwer.

However, the list of prices consists of more than the heavyweights. The all-share index of the Amsterdam Stock Exchange, which is part of the Euronext exchange group, includes more than 130 stocks. A number of them are unknown even to many locals – including half a dozen smaller values ​​that are attracting some interest, especially in specialist circles. Because they have to worry about their stock market listing because they don’t have a sufficiently qualified auditor.

Listed companies are classified as “public interest organizations”, abbreviated as OOB in the Netherlands, and have to be audited by a certified auditor. However, several auditors have withdrawn from the OOB services, probably also in connection with criticism of the financial regulator AFM on their work. The only ones who can still provide this service are the “Big Four” (Deloitte, Ernst & Young, KPMG, Pricewaterhouse Coopers) as well as BDO and Mazars.

Last deadline until November 3rd

The six listed companies got into trouble because, after a two-year grace period, they were still unable to produce an OOB auditor by mid-April. The exchange therefore began a “delisting” process earlier this month, i.e. removal from the exchange. The process takes six months, and so the companies concerned now have a final deadline of November 3, as the person responsible for listings in Amsterdam, René van Vlerken, said in an interview with the FAZ last week. Euronext Amsterdam wants to use the auditor’s specifications to ensure reputation, stability and quality, “also to protect investors,” added Euronext Amsterdam boss Simone Huis in ‘t Veld.

Anyone who does not meet the requirements in the regulated market will be put on the “penalty box”, as it is called here. Example: the ladder and scaffolding manufacturer Alumexx – one of the six companies affected. According to its own statements, it had to metaphorically sit on the bench with its 2020 share because its auditor returned the OOB approval and then found no replacement. In April 2021, Euronext Amsterdam gave all six penalty boxers 24 months to comply with exchange rules again.

The deadline passed last month, Alumexx announced an objection to a possible lockout. In addition, a move to a less strictly regulated segment of Euronext’s sister company Brussels will be discussed with Euronext Amsterdam. The holding company Lavide, which is also affected, reports the same, which is also considering Paris in addition to Brussels. The investment holding Value8, which is about to face the same problem, points to a “capacity problem in the Dutch OOB market”: While the country has six suitably qualified auditors, there are 500 in France, for example.

Finance Minister supports the stock exchange

The stock exchange recently got its back from Finance Minister Sigrid Kaag from the left-liberal party D66: “A listed company that can’t find anyone to check the annual report obviously has a serious problem,” she said in response to a parliamentary question in the second chamber in The Hague – and referred to the Credit Suisse case, which demonstrates the central role of serious auditing.