Part III - Purchase of shares - After-treatment measure responsibility under the Swedish Environmental Code

As a purchaser of shares in a Swedish company you have to consider the environmental aspects mentioned in earlier posts.

• If you purchase the shares of a company which has been or is conducting environmentally hazardous activities, owning real property or buildings or even leasing real property, a building or only a part thereof, the shares of that company  will introduce any and all of its environmental responsibility under the Swedish Environmental Code into your own group of companies. The change of owner does of course not change in any way the fact that the company in question may have liabilities under the Code.

• As a purchaser you have to safeguard yourself against unwanted and unknown liabilities to the extent possible and you should take the following steps.

• Carry out a thorough environmental due diligence to ascertain the possible risks of environmental liability resting on the company.

• Provide for a compensation under the share purchase agreement from the seller if, and, when, the company is required to undertake and pay for clean-up and after-treatment measures. Such a provision will only apply between seller and purchaser. The legal claims under Chapter 10 of the Swedish Environmental Code will still have to be handled and borne by the company.

The next post will cover “Purchase of business assets including real property”