Squidoo Lense, Swedish Law

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English Translation of the New Swedish Companies Act

I have checked when a translation into English of the text of the new Swedish Companies Act may be available.

The Swedish Ministry of Justice is not going to do an official translation.

However, the Swedish book publishing firm of Norstedts (in Swedish only I'm afraid) will produce an English translation, which probably will by ready sometime this spring. It will be published as part of their publication Swedish Commercial Legislation (ISBN 91-38-55182-9) but also as a separate book.

Time of Registering Shares

Old Swedish Companies Act
According to Chapter 3 Section 13 of the old Swedish Companies Act the following used to apply:

If the share register of a company was maintained by electronic data processing, a print-out of the share register setting forth the circumstances ten days prior to a shareholders’ meeting should be made available to the shareholders at the meeting. From a practical point of view you then had to be registered in the share register at least ten days before the shareholders' meeting.

New Swedish Companies Act
According to the new Swedish Companies Act, Chapter 7 Section 28, the earlier ten day period has been changed to a five day period instead. In addition, the articles of association of the company may prescribe an even shorter period of time.

New Swedish Companies Act – Important changes – Part IV

Changes of the Board of Directors

All changes in respect of directors, deputy directors, authorized signatories and managing director will only take effect upon the receipt by Bolagsverket of a notice of change. Please note that it is the date of receipt and not the time of registration that is decisive. According to the old law the relevant time was the time of the shareholders’ meeting or board meeting where the change was decided.

The effect of this change is that a newly elected board not can hold a board meeting until a notice of the change has been sent of to Bolagsverket. When the shareholders have elected the new directors at the shareholders’ meeting, a notice of the change should be faxed or mailed and then the board meeting can be held.


Articles of Association

Amendments may have to be made in the articles of association to bring them in line with the new act.

No par value of the shares should be included. In stead the number of shares or, as an alternative, the minimum and maximum number of shares should be set out. The minimum and maximum number of shares should correspond to the minimum and maximum amount of share capital.

This change does not have to be effected until another amendments is made in the articles of association. All other amendments should be made at the first general shareholders’ meeting in 2006. If a company fails to make prescribed changes at the first general shareholders’ meeting in 2006 the relevant provision will be void.

Under the old act the only provision for “pre-emptive rights” allowed in the articles of association was a provision stating that a buyer of shares in the company was obliged to offer the shares to the other shareholders. The new act opens up the possibility to prescribe that, before selling his shares, a shareholder must either obtain the consent of the company or offer the shares to the other shareholders.

New Swedish Companies Act – Important changes – Part III

“Value transfer”

• The legislator has introduced a new concept “Värdeöverföring” to cover all transfers of assets from the company to a shareholder or other person. (I have not found any official translation but will be using the expression “Value Transfer” for this concept.)

• Value transfers may only be carried out in amounts allowing full coverage of the restricted shareholder’s equity directly after the transfer.

• In addition, there is a general rule of cautiousness stating that a value transfer may only be executed if it is “reasonable” considering

• the demands put on the amount of the shareholder’s equity by the type, extent and risks of the company’s business activities and


• the need of consolidation, liquidity and general position.

• When the company’s board of directors proposes profit distribution, the board is obliged to give a written motivation to the effect that the proposal is “reasonable”.

• Additional distribution of profit may be decided at an extra ordinary shareholder’s meeting.

• The previous rule concerning profit distribution in groups of companies has been removed but the rule of cautiousness shall be considered at group level in the parent company.

Prohibition on Loans to Shareholders

• These rules are kept in principle but one important change has been made. It will be possible to sell a subsidiary on credit because only loans for purchases of shares in the company itself or in superior companies of the same group.

to be continued

New Swedish Companies Act – Important changes

Issues of Shares

• The rules on publishing of resolutions regarding issues of shares, options and convertibles have been deleted.

• Earlier the amount to be paid for a new share must not be lower than the par value of the share. As shares will no longer have a par value, the subscription amount will be compared with the part of the company which the share will represent.

• New rules in respect of options and convertibles will give more flexible possibilities for increases of capital.

Restricted and Non-Restricted Shareholder’s Equity

• Amounts allocated to the share premium reserve from January 1, 2006 will be considered as non-restricted shareholder’s equity.

• The rules on mandatory allocation of funds to the statutory reserves have been removed.

• Amounts in the share premium reserve as of January 1, 2006 shall be transferred to

To be continued

New Swedish Companies Act – Important changes

As mentioned in an earlier post at Swedish Law Blog the new Swedish Companies Act (link to Swedish version only) will enter into force on January 1, 2006. The act has been rewritten and consists of 31 chapters compared to the 19 chapters of the old act. Major changes have been made concerning i. a. shares, issuance of new shares, the statutory reserves, lending to shareholders, the new concept “value transfer”, changes of the board of directors and the contents of the Articles of Association (bolagsordning).

In this and a couple of following blog posts I will cover the most important changes relevant to an established Swedish limited company without the aim of giving a thorough and detailed report on all the changes.


1. Shares
• A share in a Swedish limited company will no longer have a par value. It will instead only represent a certain part of the company. This part of the company is calculated by dividing the total share capital with the number of shares.

• New share certificates shall include the social security number (person- or organisationsnummer) of the shareholder.

to be continued

Purpose of this Blog

This blog is intended to cover mainly the new Swedish Companies Act entering into force on January 1, 2006.

Certain earlier posts at Swedish Law Blog covering corporate issues will be moved here.