The AGM of a limited company can decide on voluntary liquidation and forced liquidation by an absolute majority. An absolute majority, by extension, means more than half of the votes casted. In the event of an equal number of votes, the Chairman shall have the deciding vote. However, it is possible to make deviations from the main rule in the articles of association. Such a deviation may impose higher or lower majority requirements.
A decision on liquidation must be reported for registration with the Swedish Companies Registration Office. It is upon the AGM to appoint someone to handle the notification. Such an assignment may be submitted to the Board of Directors or the Managing Director. However, it is free to appoint others to make the application. The decision on liquidation applies immediately while the entry of the liquidation must not be placed before the decision date. A situation may also arise where the Swedish Companies Registration Office must decide on forced liquidation. An example of this is if the company has not, in a correct manner, submitted a notification to the Swedish Companies Registration Office regarding the competent board, the CEO, special service recipient or auditor in accordance with the Companies Act. A decision on liquidation issued by the Swedish Companies Registration Office can be appealed to the general court. Regardless of whether the matter is handled by the Swedish Companies Registration Office or the general court, shareholders in the company and creditors who wish to comment on the matter can submit such an opinion at the appointed time.
The Swedish Companies Registration Office or the General Court shall appoint one or more liquidators when decisions of liquidation are announced. There is a requirement for suitability for the person appointed as a liquidator where, among other things, he should not have been a member of the executive management or been a shareholder with such a large holding of shares that he was able to exert a significant influence over the business. The liquidator takes the place of the board and the CEO and has the task of carrying out the liquidation. As soon as possible, the liquidator shall, through sale or otherwise, turn the company’s property into money and pay the company’s debts. If the company is insolvent, the liquidator must apply for the company to go bankrupt. After the assignment as liquidator has been completed and a final report has been submitted, the company is considered dissolved. The liquidator must then report this for registration in the Companies Register.
Chapter 26 – Change of company category
A decision that a private limited company should be made public is made by the AGM and requires a qualified majority. The decision to change the category of company must be registered for registration in the Companies Register and it is only after the decision has been registered that a private limited company is considered to have gone public.
A decision that a public limited company should become private is subject to the regulations of Chapter 7. ABL on amending the Articles of Association. Such a decision is considered valid only if it has been assisted by all shareholders present at the AGM and that together they represent at least nine tenths of all shares in the company. This, too, is a decision that must be reported for registration in the Public Limited Companies Register and a public limited company is considered to have become private once the decision to change has been registered.
Chapter 27 – Registration
A registration in the Companies Register is made in Swedish. However, a company may, on request, obtain registration in any other official language of the European Union or in Norwegian or Icelandic. Anyone who requests that registration be done in another language must, unless the Swedish Companies Agency decides otherwise, provide a translation into the language referred to in the documents to be registered. Such a translation must be carried out by a translator who is authorized or has equivalent foreign education.
The Swedish Companies Agency must announce in the Post- och Inrikes Tidningar what has been registered in the Companies Register. However, bankruptcy or corporate restructuring decisions are exempt and should not be announced as above. It is also in connection with the announcement in the Post- och Inrikes Tidningar that what has been entered in the Companies Register is considered to have come to the notice of third parties. In the event that what has been announced in the Post- och Inrikes Tidningar does not match what has been entered in the Companies Register, the company cannot invoke the contents of the announcement against third parties.
If a board member, the CEO, a special company signer, another deputy for the company, an auditor or lay auditors have been declared bankrupt, and have gotten a trustee according to Chapter 11. § 7 FB or received a business ban, the Swedish Companies Agency shall remove the deputy representative, the auditor or the play chamber auditor from the Swedish Companies Register. With regard to changes in the share capital, a decision to amend the articles of association on the share capital shall be registered at the same time as a decision to increase or decrease the share capital or a decision on the aggregation or division of shares, if any of the decisions are necessary for the share capital or the number of shares to be compatible with the articles of association.
Chapter 28 – Aktiebolaget’s company name
A limited company must use the term “limited company” or the abbreviation “AB” in its company name. As far as private limited companies are concerned, no further designation is required which shows which category it is. The name of a private limited company may not contain the word publicly. A corporation’s letter, invoices, order forms and websites must state the company’s company name, the place where the board has its seat and the company’s organizational number. If the company went into liquidation, this must also be stated. Documents issued for a limited company shall be signed with the company’s company name, unless the company name is otherwise stated.
In the event that a board or other deputy of the company has issued a document without a company signature, those who have signed the document shall be jointly liable for obligations according to the document as if their own debt. However, the above does not apply if it is clear from the contents of the document that it was issued on behalf of the company.
In the same way that a private limited company may not contain the word public, a public limited company may not contain the word private in its company name. The public name of a public limited company shall be followed by the designation (publ), unless the company name of the company indicates that the company is public.
Chapter 29 – Damages
A founder, board member or the CEO who intentionally or negligently injures the company within the scope of his or her duties must also compensate for the damage. The same applies when the damage is inflicted on a shareholder or someone else. An auditor, lay auditor or special examiner must also compensate for damage according to the grounds mentioned earlier. The same applies to damage intentionally or through negligence caused by his or her assistants. There are also restrictions on the shareholders’ freedom of action insofar as shareholders can become liable for damages by contributing to a breach of ABL or the Articles of Association and, by extension, willfully or negligently inflict damage on the company. If someone is considered liable for damages as stated above, the damages can be reconciled according to what is reasonable with regard to the nature of the act, the magnitude of the damage and the circumstances in general. If several people are to compensate for the same damage, joint liability is expected.
The claim for damages to the company may be brought, if the majority or a minority, consisting of owners of at least one tenth of all the shares in the company, has assisted at a general meeting a motion to bring an action for damages or, in the case of a board member or the managing director, has voted against a discharge proposal.
Chapter 30 – Penalties and fines
For a fine or imprisonment for a maximum of one year a person can be sentenced who violates Chapter 1. Sections 7 and 8 of the ABL regarding prohibition on the distribution of shares, etc. in private limited companies and anyone who fails to keep a share book or keep a share book available according to ABL. For additional actions that may give rise to criminal liability, we refer to Chapter 30, Section 1, ABL.
The Swedish Agency may also impose a fine on the CEO or a board member if they do not fulfill obligations under ABL or other regulations.
Chapter 31 – Appeal
Decisions by the Swedish Companies Agency can be appealed to either a general administrative court or the district court in the place where the company’s board has its seat. Regarding decisions that can be appealed to a general administrative court, we refer to Chapter 31. 2 § ABL. For decisions that can be appealed to the district court, see Chapter 31. 3 § ABL. Decisions from the Swedish Tax Agency and the Swedish Financial Supervisory Authority can also be appealed. For the first mentioned authority, we refer to the provisions of Chapter 31. 5 and 5a §§ ABL. A decision from the Swedish Financial Supervisory Authority is appealed in accordance with the provisions of Chapter 31. Sections 6 and 7 of the ABL. In an appeal to the Adminstrative Court of Appel, a leave of appeal must be given.
If you have any further questions regarding the Swedish Companies ACT, you are more than welcome to contact us.