The Court of Appeal has ruled to partially allow Sports Direct’s appeal to overturn a High Court ruling from 2018 which ordered it to submit 40 company documents to the Financial Reporting Council (FRC).
It comes after the FRC attempted to gain access to the documents in relation to its investigation of Grant Thornton’s audit of Sports Direct in 2016 by taking the retailer to court.
The FRC’s investigation focused on whether Grant Thornton signed off on a business arrangement between Sports Direct and Barlin Delivery, which was not disclosed in the retailer’s accounts.
The retailer, which is owned by Mike Ashley and is part of the Frasers Group, said it had a “fundamental right” to the documents it sent to Grant Thornton and Deloitte.
Now the FRC has revealed the court decided that the recipient of a notice by the FRC requesting information under the Statutory Auditors and Third Country Auditors Regulations 2016 (SATCAR) is not required to produce legally privileged documents.
This decision applies whether the person entitled to the privilege is the auditor under investigation or the audited entity.
However, The Court of Appeal also upheld the decision of the High Court that, where a request is made under SATCAR for emails and their attachments, the fact that the email may be privileged does not automatically mean that the attachment is privileged. Non-privileged attachments therefore need to be provided to the regulator.