Part II - Forms of Business Ventures in Sweden

Sole Trader

• Only a natural person may act as a Sole Trader (“Enskild firma”). A person living abroad (not legally domiciled in Sweden) must appoint a manager who will be held responsible for the business in Sweden. The manager must be legally domiciled (folkbokförd) in Sweden.

The remaining five forms of business ventures are open to foreign companies as well as natural persons interested in starting business in Sweden.

Limited Company

• The most common way of establishing a business in Sweden is through a company limited by shares (“Aktiebolag”). All shares in the company may be owned by foreign nationals or companies and no special acquisition permit is required.

• Swedish limited companies are divided into two categories, private companies and public companies. Only public companies can offer their shares to the general public and have to have a share capital of at least SEK 500,000 while the minimum share capital of private companies is SEK 100,000.

• It should be noted that a new Swedish Companies Act is proposed to enter into force on January 1, 2006.

Branch

• A foreign company may do business in Sweden through a branch with its own independent administration. A branch does not require any actual capital investment by the foreign owner, as the branch has no share capital. It is not considered as an independent legal entity but as a part of the foreign parent company.

EEIG

• The next alternative, the European Economic Interest Group, EEIG, is only open to nationals and companies domiciled in the European Economic Area, EEA. The EEIG is especially useful in a situation when several companies in at least two of the EEA countries want a separate entity for a special project.

European Company (SE)

• Another alternative, open only to companies within the European Union is the European Company or SE (“Europabolag”).

Trading Partnership and Limited Partnership

• Going back to more traditional Swedish company forms, one way is to establish a Trading Partnership (“Handelsbolag”) or a Limited Partnership (”Kommanditbolag”). In a Trading Partnership all partners are liable for the company´s commitments, but in a Limited Partnership one or several partners can agree to be liable for all debts of the company while the remaining partners are liable only for their investment, which has to be at least SEK 1 (one).

Economic Association

• Finally, an Economic Association (”Ekonomisk Förening”) could be established. It is, however, an open association mainly for co-operative activities and, in principle, it cannot refuse membership to anyone. There is no demand for a starting capital similar to a share capital of the limited company. The business activities of the association should be to the financial benefit of the members.