{"id":29665,"date":"2024-02-27T09:34:49","date_gmt":"2024-02-27T09:34:49","guid":{"rendered":"https:\/\/thelegalcompany.nl\/?p=29665"},"modified":"2026-09-02T08:02:28","modified_gmt":"2026-09-02T08:02:28","slug":"the-sale-of-your-company-can-be-completely-reversed-in-the-event-of-incorrect-financial-figures","status":"publish","type":"post","link":"https:\/\/thelegalcompany.nl\/en\/the-sale-of-your-company-can-be-completely-reversed-in-the-event-of-incorrect-financial-figures\/","title":{"rendered":"The sale of your company can be completely reversed in the event of incorrect financial figures."},"content":{"rendered":"

When it comes to a share transaction, the rule ‘bought is bought’ does not always apply strictly. In some cases, a buyer can completely reverse the purchase if it turns out that they were misled by the seller. This legal concept is called mistake (dwaling). This is the case, for example, if the seller has provided incorrect financial figures in the context of the due diligence investigation to be carried out by the buyer; an investigation that every (prudent) entrepreneur carries out to check that there are no skeletons in the closet at the target company. When exactly is there a case of mistake, such that the buyer can annul the purchase agreement and claim repayment of the purchase price?<\/p>\n

Case. <\/strong><\/h5>\n

In the Supreme Court ruling of 8 February 2024, the years-long legal battle between seller and buyer is settled. The buyer had taken over all the shares of a company specializing in electronic security systems from the seller. This was for a symbolic amount of \u20ac1, but the buyer would also take over a debt of the seller to the operating company amounting to \u20ac482,933. As part of the due diligence investigation, the seller had provided an acquisition balance sheet, and also confirmed its accuracy by means of a warranty. This acquisition balance sheet stated, among other things, a profit of \u20ac94,284.<\/p>\n

However, after the purchase had been concluded by the parties, it turned out that the seller had not made this profit at all over the past year. In fact, it had even suffered a loss of \u20ac109,236, and due to its poor financial position it was later declared bankrupt. The buyer did not let it rest and annulled the purchase agreement on the grounds of mistake. After all, the seller and its director had provided incorrect information about the target company. The buyer therefore claimed in court repayment of the entire purchase price by the seller.<\/p>\n

Supreme Court ruling.<\/strong><\/h5>\n

The Supreme Court overturned the ruling of the Court of Appeal, which had said that reversing the share transfer that had taken place years earlier was considered difficult. In fact, it is possible to simply return the shares and the company (or what was left of it) and undo the payments. There was no reason why fully repaying the purchase price to the buyer should be considered unreasonable. The Court of Appeal focused too much on the disadvantages for the seller, without giving sufficient explanation of any advantages for the buyer. In response, the Supreme Court referred the case to another court of appeal, which was tasked with reassessing the appeal, but taking into account the Supreme Court’s considerations.<\/p>\n

The correct legal process when selling or buying your company.<\/strong><\/h5>\n

Buying and selling shares and your company is a complex process on which a great deal depends. Taking the time to really conduct a good due diligence investigation as a buyer is of great importance. This is often skipped over too quickly, and you can then suffer the consequences for a long time after you have bought the company. As a seller, too, you would do better to insist on such a thorough investigation, and above all not to make your figures look better than they really are. After all, you too can suffer the consequences of that for a long time after you have sold. The buyer must be alert to window dressing when figures are provided. It is better to detect these matters beforehand than to have to reverse them afterwards. Better safe than sorry. But fortunately it has now been established that it can indeed be reversed, even after years. Because however good a DD may be, you cannot find out everything. And then it really is up to the seller not to misrepresent matters or fail to disclose them.<\/p>\n

Letter of Intent and acquisition agreement.<\/strong><\/h5>\n

It remains crucial to plan the transaction carefully with a tight timeline in a Letter of Intent with the necessary conditions. Also take the time for the DD investigation, with the help of the right experts (lawyer, tax advisor and accountant). And then, after the green light from the DD investigation, lay down the sale and purchase conditions legally and precisely in a purchase agreement with the right conditions, warranties and representations.<\/p>\n

Precision is of great importance when drafting this, since both buyer and seller want to limit their risks as much as possible. In the case above, for example, the seller could have done this by contractually excluding a claim of mistake. That is indeed permitted.<\/p>\n

Do you have any questions about share transactions, the purchase or sale of your company through an asset-liability transaction? Then contact the lawyers at The Legal Company via info@thelegalcompany.nl<\/a> or 020 345 0152.<\/p>\n

Nothing is as changeable as legislation and regulation. Please note that our blogs may no longer align with current legislation and regulations and may therefore be outdated. If you have questions or a problem relating to this blog, or if you require legal assistance, please contact us.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

When it comes to a share transaction, the rule ‘bought is bought’ does not always apply strictly. In some cases, a buyer can completely reverse the purchase if it turns out that they were misled by the seller. This legal concept is called mistake (dwaling). This is the case, for example, if the seller has […]<\/p>\n","protected":false},"author":2,"featured_media":23664,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"page_builder":"","footnotes":"","_et_pb_custom_css":""},"categories":[202,209],"tags":[],"class_list":["post-29665","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-contract-law","category-corporate-law"],"acf":[],"_et_pb_custom_css":"","yoast_head":"\nThe sale of your company can be completely reversed in the event of incorrect financial figures. - The Legal Company<\/title>\n<meta name=\"description\" content=\"Als het om een aandelentransactie gaat, is de regel \u2018gekocht is gekocht\u2019 niet altijd strikt van toepassing. 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