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.