If a foreign company wishes to establish a business venture in Sweden without doing it in the form of a Swedish limited liability company, one alternative is to carry on its activities through a Swedish branch office (“filial”).
- According to the Act on Branches of Foreign Companies (Lag om utländska filialer), a branch office may normally be established without approval by the Swedish authorities. However, the branch office has to be registered in the branch register kept by the Bolagsverket.
- The branch is not a separate legal entity but a part of the foreign company and, thus, the foreign company establishing the branch is liable for the branch office’s debts and obligations with its own total assets. This is an important difference when compared with the Swedish limited liability company, where the shareholders will not ordinarily be liable for the company’s debts and obligations. The financial risk is limited to the share capital, SEK 100,000 or SEK 500,000 depending of whether it is a private or public company. Look at my previous post on the Swedish limited liability company here.
- A foreign company desiring to start a branch office in Sweden has to register it in the branch register. The foreign company must be registered as a legal entity according to the laws of its country of origin and must carry on business there.
- The application should preferably be made through the prescribed form. Further information about branch registration can be found in English at Bolagsverket’s site.
- An application for registration must be sent to Bolagsverket before starting any business activities in Sweden.
- The activities of the branch office shall be carried on and registered under a name that includes the name of the foreign company with the addition of the word ”filial”, and clearly indicate the nationality of the foreign company. In addition, the name must be distinguishable from other registered names and trademarks.
Management of the branch office
- The branch office shall be lead by a managing director, who shall be legally competent, not in bankruptcy, resident in the European Economic Area, (EEA)
- and not subject to a prohibition to conduct business. However, Bolagsverket may grant an exemption from the residence requirement.
- If the managing director is not a resident of Sweden, the foreign company must appoint a Swedish resident to accept service on its behalf.
- The managing director shall be responsible for the branch office’s operations. The foreign company shall issue a power of attorney for the managing director. Such power of attorney shall authorize the managing director to act on behalf of the foreign company in all matters concerning its activities in Sweden, to accept service of process on behalf of the foreign company, and be the legally responsible representative of the foreign company.
- The accounts and bookkeeping of a branch office shall be kept separate from the accounts of the foreign company.
- The managing director of the branch office shall annually submit to Bolagsverket certain accounts for the branch office and/or the foreign owning company, depeding on whether that company is within the European Economic Area, (EEA) or not. Detailed information is, again, to be found at Bolagsverket’s site.
- A Swedish authorized (certified) public accountant or an approved accountant or a registered accounting firm shall audit the administration and accounts of the branch office.