Mergers and Acquisitions in Sweden

This is a summary of some of the most important and/or special legal and regulatory framework governing mergers and acquisitions in Sweden, tailored for foreign investors and companies seeking to understand and navigate the complexities of the Swedish market.

  1. 1.      Board of Directors

In Sweden, the composition of a company's board of directors is regulated under the Swedish Companies Act. For private limited companies, the board can consist of as few as one or two board members, in which case at least one deputy board member must be appointed. If the board consists of two or more board members a chair of the board must be appointed. There is no maximum number of board members the board can consist of. For public limited companies, there are further requirements regarding the composition of the board. A private limited company does not have to appoint a managing director.

At least half of the board members, at least half of the deputy board members, the managing director, all deputy managing directors and at least one of the persons who are authorized to sign on behalf of the company must reside within the European Economic Area (“EEA”), unless an exemption is granted from the Swedish Companies Registration Office (“SCRO”). Residency refers to the current place of living, not citizenship. If none of the company's representatives reside in Sweden, the company must appoint a specific recipient of notifications.

For companies in sectors like banking or insurance, which are under the supervision of the Swedish Financial Supervisory Authority (“SFSA”), there are additional competence requirements to ensure that board members have adequate experience and qualifications relevant to the company’s operations. A company under the SFSA’s supervision is required to notify SFSA whenever the company makes changes to the board and company management. And all companies, including companies that are not subject to SFSA’s supervision, are required to report any such changes regarding the composition of the board to the SCRO.

  1. 2.      Share Register and Share Certificates

Swedish companies are required to maintain a share register that records all issued shares and their holders. The board of directors of the company is responsible for maintaining and ensuring legal compliance of the share register. If the share register is missing or is not updated, the company’s board of directors are liable for such omission. It can also lead to significant organizational problems during voting at the general meeting since only shareholders listed in the share register are entitled to participate and vote. Not having a share register can also lead to significant practical problems in share transfers because it is not clear who owns shares in the company. If a third party, i.e., a person or a company unrelated to the company, is adversely affected due to the information not being updated in the share register, this may lead to a compensation claim. Due to the many risks posed by an incomplete or erroneous share register it is imperative that the acquiring party investigates the company’s share register as part of their due diligence.

For regular limited companies that are not Central Securities Depositories Companies (sw. avstämningsbolag), the share register is public and must be made available to the public at the limited company.

A share certificate indicates who owns one or more of the limited company’s shares. Shareholders may request that the limited company issue a share certificate for the shares they own. Share certificates, while still used, have largely been replaced by electronic records in practice. An acquiring company should therefore investigate if any physical share certificates have been issued.

  1. 3.      Types of Share Classes

The Swedish Companies Act allows for different classes of shares (e.g. “A” and “B” shares). Each class can confer different rights concerning voting, dividend distributions, and priority during liquidation. Commonly, companies may issue ordinary shares and preference shares, with the latter possibly offering preferential dividend rights but limited or no voting rights in certain cases. Understanding the rights attached to each share class is crucial for potential buyers, as it affects their control and financial benefits in the company. The characteristics of each share class must be specified in the company’s articles of association.

  1. 4.      Regulatory Contacts and Approvals

When acquiring a Swedish company, several regulatory filings and approvals may be necessary, depending on the business sector and the size of the transaction:

-          SCRO: Reporting the registration of beneficial ownership, changes in the board composition or the company’s auditor and other information related to the company that might need to change, such as the address. The SCRO’s processing time for decisions in the mentioned cases is approximately eight banking days from the day information and payment of registration fee are received.

-          SFSA: Only relevant for acquisitions in the financial sector, where ownership and management assessments, authorizations, and reporting of the company’s financial information may be required. The processing of the case starts when a complete application has been received and the fee has been paid. The SFSA decide on the matter within 60 banking days. If they need additional information, the processing time can be extended, usually by up to 20 additional banking days.

-          Swedish Competition Authority (“SCA”): The SCA oversees issues related to corporate concentration. For large mergers or acquisitions that may impact market competition, a review and approval by SCA are required after notification by the companies. The notification requirement applies if the companies concerned together had a turnover in Sweden in the previous financial year exceeding 1 billion SEK, and at least two of them had a turnover in Sweden in the previous financial year exceeding 200 million SEK for each of them. SCA may also request a notification from the concerned companies even if the values of the turnovers are less than specified above. Once a complete notification is received the SCA have 25 banking days (Phase 1) to decide whether to leave the acquisition unchallenged or whether a separate investigation is needed. If they decided to initiate a so-called special investigation after phase 1, they have a further three months (Phase 2) to prohibit the acquisition or to leave it without action.

-          Inspectorate of Strategic Products (“ISP”): Specifically relevant for companies with business related to sensitive sectors for national security, e.g., critical infrastructure. Sweden's Foreign Direct Investment (“FDI”) law is designed to protect national security interests while promoting foreign investment. For sectors deemed sensitive transactions may require additional approval from the ISP. It is vital for potential investors to understand these regulations to navigate the approval process successfully. A company being acquired is also obligated to inform the buyer if their business is subject to FDI legislature.


  1. 5.      Beneficial Ownership

Identifying the beneficial owners – individuals who ultimately own or control the company – is a regulatory requirement in Sweden. Companies in Sweden must report their beneficial owners to the SCRO and ensure this information is kept current. If a company fails to report their beneficial owners, they may be subject to fines.