Part IV – Swedish Limited Company - Forms of Business Ventures in Sweden

The most common way of establishing a business in Sweden is through a company limited by shares (“Aktiebolag”). This form of companies is regulated by the Swedish Companies Act

Formation

• It is formed by one or more natural persons or legal entities.

Foreign Owners

• All shares in the company may be owned by foreign nationals or companies and no special acquisition permit is required.

Legal Entity

• The company is a legal entity and is issued with a registration number (“organisationsnummer”).

Two Kinds of Limited Companies

• Swedish limited companies are divided into two categories, private companies and public companies. The provisions of the Swedish Companies Act are applicable to all limited companies, but there are some statutory rules that differ between the two kinds of limited companies. The main rules that differ are the following.

• Public limited companies shall have a share capital of not less than SEK500,000 while the minimum share capital of private companies is SEK 100,000.

• Only public limited companies may issue investment certificates to the public and thus only public limited companies can be listed on an exchange. A private company, or a shareholder of such company, may not attempt through advertising to distribute shares or subscription rights in the company or debentures or warrants issued by the company.

• The board of a public company shall consist of at least three members but a private company is allowed to have one or more.

• A managing director has to be appointed in a public company. In private companies it is allowed to have a managing director and most private companies has appointed one.

Auditor

• A limited company must appoint one o more approved or authorized public accountants to act as company auditor.

Business name

• The registered business name of a limited company is protected throughout the country.

Financial Year

• A limited company may have a split financial year, which can facilitate financial planning with regard to taxes, credits, salaries and interest.

Responsibility and risk

• A considerable capital investment is necessary when starting up a limited company, but apart from that, the owners have no personal responsibility for the company’s debts or other obligations.

• N. B.!! The board of directors and the managing director has extensive responsibility and in certain circumstances, these persons can become personally responsible for the company’s debts; especially unpaid taxes and social contributions.

Voting Rights

• The Swedish Companies Act sets out the general rule that each share has one vote, but the articles of association may provide for shares with differences in voting rights. However, no share may have a voting right exceeding more than ten times the voting right of another share.

Rights in dividend etc

• The main rule is that all shares carry equal rights in the company. However, the articles of association may provide for shares of different classes. Shares may carry different rights to dividend and/or in the assets in case of liquidation.

New Swedish Companies Act 2006

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