Introduction

Establishing a company in Sweden is a relatively simple, straightforward procedure:

* Rules, regulations and formalities are clear and well-established.

* Restrictions have been eliminated on foreign ownership of corporations and property.

* One central government agency, the Swedish Patent and Registration Office, handles all paperwork involved in registering a company. The Office offers a Start-up Kit containing all application forms and pre-printed material needed for establishing a limited liability company, the most common form of company in Sweden.

Swedish Patent and Registration Office
The Swedish Patent and Registration Office (Patent och Registreringsverket, PRV) is a fee-financed government agency which handles, as its name implies, both patents and company registrations.

The Patents and Trademark Department, located in Stockholm, is the national patent application and granting agency. It also registers trade marks, company names and designs. The Department for Commercial Services, Interpat, conducts research, on a fee basis, on patents, trade marks and designs.

The Companies Department, known as PRV Bolag, is located in Sundsvall in northern Sweden. This agency was founded in 1897 to register limited liability companies. Today, it has expanded into an organization for registering all types of companies, from one-man firms to branches of foreign corporations. It maintains a complete national registry of company annual reports, legal decisions, liquidations, and other valuable business information, all of which is available to the public.

Forms of Companies
There are five basic legal forms for companies in Sweden: Sole Trader, Trading Partnership, Limited Partnership, Limited Liability Company, and Branch of a Foreign Company.

Sole Trader
A sole trader (enskild näringsidkare), the simplest company form, is created when an individual starts a business. It is not a legal entity, nor is it governed by any special legislation. However, it is registered at the Companies Department.

There are no minimum capital requirements, the individual is fully responsible for debts. A sole trader must maintain financial accounts, but need not file annual accounts if sales are under 20 basic amounts. (One basic amount equalled SEK 36,200 in 1996.) However, if the company has more than 10 employees and if assets exceed 1,000 basic amounts, an annual report and an authorized auditor's report are required. If the company has more than 200 employees and assets exceed 1,000 basic amounts, annual accounts must be filed with the Patent and Registration Office. The accounts are then part of the public record and open to public inspection.

Companies or individuals who reside outside Sweden may register a sole trader if there is a person in Sweden accountable for operations.

The sole trader pays self-employer fees and personal income taxes on the business profits.

Trading Partnerships
A trading partnership (handelsbolag) is created through an agreement between two or more legal entities (companies) or persons. These need not be Swedish citizens or residents. Trading partnerships, governed by the Trading Partnership Act of 1980 (Lag om handelsbolag och enkla bolag 1980:1102) become a legal entity when registered by the Patent and Registration Office.

Trading partnerships have no minimum capital requirements. All partners are liable for debts. A trading partnership must keep running accounting records. If there are more than 10 employees or if assets exceed 1,000 basic amounts, annual accounts must be drawn up and an authorized auditor's report must be attached to the annual report. If there are more than 200 employees and assets exceed 1,000 basic amounts, the annual accounts must be filed with the Patent and Registration Office. The accounts are then part of the public record and open to public inspection.

Partners divide the profits between them at their own discretion. Each partner is taxed for the share of profits which is reported on his or her income tax declaration.

Limited Partnership
A limited partnership (kommanditbolag) operates under the same general rules and regulations as a trading partnership. The chief difference is that one or more of the partners can limit their liability to the amount of their investment in the company. However, at least one partner must have complete responsibility for debts. A partner with limited liability is called a limited partner and a partner with full responsibility is called a general partner.

Limited Liability Company
A limited liability company, or incorporated company (aktiebolag), is mainly regulated by the Companies Act of 1975 (Aktiebolagslagen). It may be founded by one or more individuals or legal entities. They must invest at least SEK 100,000, and the company must allocate at least 10 percent of annual profits to legal reserves until the reserves amount to 20 percent of capital stock. Shareholders' liability is restricted to the capital invested.

The company becomes a legal entity when registered by the Patent and Registration Office. An individual or legal entity entering agreements prior to registration is liable for the agreements.

There are two types of limited companies - private and public. A private company must have capital stock of at least SEK 100,000, and a public company must have a share capital of at least SEK 500,000. The major difference between the two, besides the amount of capital, is that a private company cannot invite the general public to subscribe to or acquire the company's shares or other securities.

In the early 1990s, Sweden abolished legislation that limited foreign ownership of Swedish shares. Today, Swedish shares can be held without restrictions by foreigners. This, plus the growth of major companies and the strong performance of the Stockholm Stock Exchange, has increased foreign ownership of Swedish stock. About 35 percent of the market value of publicly traded stock is held by foreigners.

However, the possibility of stocks having different voting rights still remains.

A limited liability company may be founded by an individual who is resident in the European Union or in the other countries of the European Economic Area, EEA (Liechtenstein, Norway and Iceland), by a Swedish legal entity, or by a legal entity which has its head office in an EEA country.

Individuals or legal entities in any country outside the EEA need a special permit issued by the Companies Department of the Patent and Registration Office, unless half of the members of the board as well as half of the alternate members of the board are residents of an EEA country.

A fully-registered dormant limited liability company may be purchased for a nominal sum from specialist companies or through attorneys. These "off-the-shelf" companies can be useful when there is a need to start business quickly.

ABC Kit
To simplify formation and registration of a new limited liability company, the Patent and Registration Office has prepared a special ABC Kit containing all the necessary applications, documents, instructions and even proposed forms for articles of association, board minutes, annual meeting notices and agendas. Another kit serves as a file to contain all corporate documents and records, and also has a standard stockholder registration form and pre-printed stock certificates.

The ABC Kit makes registration of a company a simple, routine matter. Only six main documents are needed in Swedish. The first is a memorandum of association. This contains the proposed articles of association of the company, as well as a preliminary statement of how much will be paid for each share, when payment is to take place and how the statutory company meeting is to be called.

The other documents are minutes of the constituent meeting of shareholders, a bank certificate showing that the minimum of SEK 100,000 has been deposited in a Swedish bank, a subscription list of shareholders, the adopted articles of association, and, if the company is founded by individuals or legal entities resident outside the EU and EEA, a permit from the Companies Department of the Patent and Registration Office.

Applications must contain witnessed specimen signatures of all board members, deputy members, the managing director and, if applicable, deputy managing director, as well as other persons authorized to sign on behalf of the company.

An authorized or certified public accountant must be appointed as company auditor, and he or she must sign the application confirming acceptance of the appointment.

If the company has no authorized representative in Sweden, the board of directors must authorize a resident in Sweden to act on behalf of the company. The individual's name and authorization are registered by the Patent and Registration Office.

A registration fee of SEK 1,100 must be paid at the time of filing the registration forms.

A limited liability company is required to have at least three board members. They are responsible for the organization and administration of the company and appointment of the managing director. At least half of the board members and the managing director must be resident in the EEA. However, the Patent and Registration Office may grant exemptions to this rule.

A limited liability company is required to maintain running accounting records, and prepare an annual report containing an income statement, balance sheet, a proposal for allocating profits or loss, and an administration report. The administration report must contain all information of importance to enable a reader to assess the performance of the company. The report must be signed by all board members and the managing director. The income statement and balance sheet must be approved by the annual
general meeting of shareholders.

A copy of the annual accounts and auditors' report must be filed with the Patent and Registration Office, where it becomes available to the public. A company which fails to submit its annual report within 7 months from the end of the fiscal year is liable to a penalty (SEK 5,000 the first time).

Branches of Foreign Companies
Branches of foreign companies are a relatively new business form in Sweden, and have been established mainly by banks and financial institutions. About 300 branches are registered according to the Branches of Foreign Companies Act (Lag om utländska filialer 1992:160).

A branch has neither share capital nor a board of directors. It is not regarded as an independent legal entity but as part of the foreign company that owns it. A foreign company may have only one branch in Sweden. The branch is subject to Swedish law and rulings by Swedish authorities.

Application for registration of a branch is made to the Companies Department of the Patent and Registration Office, which will supply all the necessary forms and applications. The branch may not start business until registered.

In addition to information about the branch's business, address, managing director, accountants, etc., the application for registration includes details about the foreign company, the name of the executive supervising the branch, share capital, foreign registration, a copy of the articles of association or charter, copies of annual reports for the past two financial years, proof that the company is not bankrupt, and power of attorney for the managing director.

The branch is run by a managing director, with extensive power of attorney to act on behalf of the foreign company in Sweden. One deputy managing director may also be appointed. The managing director/deputy managing director must reside in the European Economic Area (EEA). If the managing director is not a resident of Sweden, the foreign company must authorize a resident of Sweden to accept service on behalf of the foreign company. This person is registered at the Patent and Registration Office.

The branch must maintain its own accounts, which are examined by a Swedish certified public accountant.The managing director is responsible for filing annual copies of the company's accounts and auditors' report, for both the branch and the foreign company, with the Patent and Registration Office. Accounts for the foreign company need be submitted only if these are public documents in the company's country of origin.

A branch of a foreign company pays tax on profits in Sweden. There is no tax in Sweden on profits sent to the foreign parent company.

Patent and Registration Office Information Services
Thanks to Sweden's public information laws, the Patent and Registration Office offers a number of valuable information services for businesses, investors, companies and other individuals or commercial organizations. The Office, which operates on a fee basis, charges a relatively modest amount for specialized services. These services are often very valuable to companies that need information about a business prospect or potential partner. Information is taken from the Office's Trade and Industry Register, which contains some 900,000 associations.

All Swedish company registrations, annual reports and interim reports are on file and available on request. The Commissions Division of the Office can provide certain information by phone, on such things as the name of the person authorized by a company to sign for the business or the names of its board of directors. More detailed information, such as the company's financial position and annual report, copies of general meeting or board minutes, etc., are supplied by fax or mail.

It is possible to subscribe for regular information covering specific companies or subjects. This could be annual reports, changes in company directors, new business registrations, etc.

Lists of companies can be ordered based on a range of parameters, such as geographic location, postal zone code, etc. This is often valuable for marketing and research. Names and addresses are supplied as lists, on computer discs or pre-printed labels.

Companies that make frequent use of the Office's information can be linked to its database by modem, providing immediate access. Companies often use this to confirm names of company executives and to find out if a company is in liquidation, has filed for bankruptcy or merged.

For new company establishment, the Commissions Division can carry out a preliminary examination of registration applications to check if all documents are properly filed. This will include a search of the company's proposed name to ensure that it is not already registered. Although this does not guarantee final approval of the company registration, it can save time.

A computer software program has been developed to assist formation of companies. The Windows-based program provides answers to questions on legal issues and details of establishing various types of companies, application forms for registration, models for articles of association and minutes of meetings, and other information. Updated versions are continually available.

The Patent and Registration Office can also provide information from counterpart agencies in Denmark, Norway, Finland and Great Britain. Information available from these countries is similar to that obtainable on Swedish companies. The most commonly requested information is for business certificates and annual reports.

Because of the large number of phone inquiries and requests, with the switchboards handling some 10,000 calls daily, the Office has established a special rapid-information number. There is a per-minute charge for this no-wait service. Other phone information service is free.

Establishing a CompanyEstablishing a CompanyEstablishing a CompanyEstablishing a CompanyEstablishing a CompanyEstablishing a CompanyEstablishing a Company

Establishing a Limited Liability Company - a Check List
Establishing a limited liability company, or incorporated company, (aktiebolag) in Sweden is a relatively simple and straightforward procedure. Attorneys and accounting firms are familiar with the process, and can even provide standard dormant corporations which are already registered. Here is a check list for the formal routine:

A Swedish limited liability company becomes a legal entity once it has been registered by the Companies Department of the Patent and Registration Office (Patent- och Registreringsverket, PRV).

For registration, certain documents (in Swedish) must be submitted:

1a. Memorandum of association (stiftelseurkund). 1 original or 1 certified copy.

1b. Articles of association (bolagsordning). The draft articles of association are to be attached to the memorandum of association.

2. Minutes of constituent meeting of shareholders (protokoll från konstituerande bolagsstämma). 1 certified copy.

3. Bank certificate (bankintyg). 1 original. The share capital, minimum SEK 100,000, must be deposited in a Swedish bank, which will issue a special certificate to that effect, signed by two bank officers.

4. Subscription list (teckningslista). 1 original or 1 certified copy. Must be submitted only if subscription for shares has not been made on the memorandum of association.

5. Adopted articles of association (antagna bolagsordningen). 2 copies. Must be submitted only if the draft articles of association have been changed at the shareholders' meeting.

6. Permit from Companies Department for a person residing outside the EEA (European Economic Area) to be founder or company officer. This is only necessary under certain conditions.

These documents should accompany an application for registration, which is form 816 (registreringsanmälan), and sent to the Patent and Registration Office.

The registration fee, SEK 1,000, must be paid at the same time, either by check or Postgiro.

The application must contain the specimen signatures of all board members, deputy members, the managing director and, if applicable, deputy managing director, and any other persons authorized to sign on behalf of the company. The signatures must be certified by two witnesses.

An authorized or approved public accountant must be appointed as company auditor and he or she must also sign the application to confirm acceptance of the appointment.

If the company has no authorized representative resident in Sweden, the board of directors must authorize a person resident in Sweden to accept service of process on behalf of the company. This person must be registered by the Patent and Registration Office.

This is only a brief guide to requirements of the Swedish Companies Act with regard to the registration of a limited liability company. If further help is needed, it is recommended that a competent Swedish legal adviser be consulted. You can also contact the Information Department of the Companies Department, Patent and Registration Office, in Sundsvall.

Address:
Patent and Registration Office
Companies Department
S-851 81 Sundsvall
Sweden

Tel: +46 60 18 40 00 (main switchboard)
+46 71 23 50 00 (rapid information, 4:55 SEK/minute)
+46 60 18 41 10 (information dept.)
+46 60 18 43 00 (advisory service)
Fax: +46 60 61 56 29

Postgiro Account: 95 06 08-0

© 1996 by Invest in Sweden Agency

Go to the
Danish Guide