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Company Act in Sweden

The Company Act in Sweden is represented by the Swedish Companies Act 2005. The rules mentioned in the company act in Sweden are available for all companies that are set up in Sweden, except for the partnerships. There is a separate act that regulates partnerships and it is called the Partnership and Non-registered Partnership Act 1980. European Directives also apply for Sweden companies when it is necessary.

In order to fulfill the requirements of the company act in Sweden, foreign investors must decide upon the type of company to establish in Sweden. They can choose between private limited liability companies, public limited companies, sole proprietorships and partnerships, which can be general or limited.

In this article, our team of company formation agents in Sweden lists the main areas that are regulated by the Act and provides addition information on laws and regulations that are relevant for company formation in this country.

What areas does the Swedish Companies Act cover?

The Companies Act is divided into several chapters, each providing essential information on all of the most important issues regarding company formation, registration, and control.

Some of the information covered in the Act refers to the following:

  • – Chapter 1: introductory terms on the guide and definitions, the notions of private and public companies;
  • – Chapter 2: the formation of a company, its founders, the memorandum of association, the subscription and the payment of shares and the effective registration of the company; also included in this chapter are special provisions on public companies;
  • – Chapter 3:  the articles of association, their contents, how changes to the articles can be made as well as special indications for public companies;
  • – Chapter 4: dedicated to the shares of the company, classes, transferability, the consent clause, the exercise of share-related rights, etc.;
  • – Chapters 5 and 6: the share register and the share certificates, main provisions and exceptions;
  • – Chapter 7: the general meetings of the company, how shareholders can exercise their decision-making rights, their voting rights, participating at general meetings, the use of proxies, convening the general meetings, the voting register, and other aspects;
  • – Chapter 8: the management of the company, including information about the board of directors, its duties, the appointment of directors, residency requirements, the replacement of a director and other aspects;
  • – Chapters 9 and 10: the 9th chapter deals with audits, the number of auditors and their duties, how they are appointed and disqualified; chapter 10 deals with general and special examinations;
  • – Chapters 11 thru 13: deal with the increase of the share capital, the issuance of new shares and bonus share issued, as well as the allotment of shares and the manner in which shares are paid for, among others.

Other aspects covered by the Companies Act in Sweden include the reduction of the share capital, issuance of warrants and convertible instruments, private placements, value transfers from the company, the distribution of profits, the manner in which loans can be made from the company to shareholders, the buy-out of minority shareholders, company mergers and demergers. Other important issues that are listed in the Act include the liquidation of a company in Sweden (the voluntary and the involuntary procedures), the change of company category (from private to public or from public to private), as well as a chapter dedicated to companies that have a special limitation on dividends.

An entire chapter of the Companies Act in Sweden is dedicated to the registration of the company. This include information about the Companies Register, how registration matters are handled by the company founders, the deregistration of the company name as well as the deregistration of an authorized company representative. Special provisions are also offered for the situation in which the company founders are to appeal a decision made by the Swedish Companies Registration Office.

Investors who open a company in Sweden can also find essential information in the Act about the company name and the special provisions of the company names in case of public companies. Selecting the name is a step that takes place prior to the registration of the company and it is important for investors to verify the uniqueness of the proposed name.

The Act has more than twenty chapters, all treating the various issues listed above. Investors who are interested in a particular aspect before they commence the company formation process with the help of our incorporation agents in Sweden can reach out to us to find out more about a specific matter.

What are other laws for interest apart from the Swedish Companies Act?

The employment legislation in Sweden is as important as the company law in Sweden. Labour law is stipulated in the Employment Act and mentions some rules to protect the rights of both employer and employee. The relationship between employer and employee in a Swedish company is strictly defined in the legislation in order to be observed. The Employment Protection Act is entirely dedicated to the rights of the employees in Sweden.

Besides the employment law in Sweden, there are also different acts that regulate the professional relationships of employees and employers. The Trade Union Representatives Act stipulates the working conditions, the salaries and the conditions that have to be me in order to make a decision for dismissal. The Swedish Work Environment Act strictly refers to the work place and all the responsibilities derived from the professional environment.

Foreign investors in Sweden or even Swedish employers might choose to hire foreign employees. In this case, they must be aware of the fact that the foreign employee has to firstly obtain a work permit. This permit is issued by the Swedish Migration Agency.

Swedish companies are subject to a set of mandatory taxes, as per the current company laws. Payroll is Sweden is not levied as a tax, however, a company that hires employees has to follow both requirements that concern the payment of social security contributions, and those related to the treatment of its employees and their rights, as per the current company and employment laws.   

How can we help you?

Whether you wish to know more about the Companies Act in Sweden or are interested in ongoing assistance and compliance during company formation, our team of incorporation experts can assist you.

The rules for setting up a company in Sweden can be explained in more detail by our team of incorporation experts. We offer complete guidance on starting a business, the various registration requirements (including those for tax purposes, and the approval of the Swedish F-tax), as well all post-registration matters such as hiring staff or handling intellectual property matters.

We provide complete incorporation services, in accordance with the rules in force for company registration, licensing and control. Our experts assist clients in choosing the suitable business form, as defined in the Companies Act, preparing the company documents as well as making all the needed submissions with the Swedish Companies Registration Office.

Contact us for more information about the Swedish Companies Act or to find out more about our incorporation packages.