{"id":1628,"date":"2021-01-13T03:40:28","date_gmt":"2021-01-13T03:40:28","guid":{"rendered":"http:\/\/hilaw.se\/?p=1628"},"modified":"2024-08-28T14:04:12","modified_gmt":"2024-08-28T12:04:12","slug":"swedish-companies-act-part-3","status":"publish","type":"post","link":"https:\/\/hilaw.se\/en\/swedish-companies-act-part-3\/","title":{"rendered":"Swedish Companies Act (Part 3)"},"content":{"rendered":"
[vc_row][vc_column][vc_column_text css=””]Chapter 17 – Value transfers from the Company<\/span><\/strong><\/p>\n

This chapter describes primarily what a “value transfer” entails, taking into account the special provisions contained in Chapters 23-25. Furthermore, it describes the various forms of permissible value transfers, i.e. dividends, the acquisition of own shares, gifts, etc. (see para. 2).<\/span><\/p>\n

In order for a value transfer to take place correctly, after the transfer, there must be full coverage for the company’s restricted equity. This calculation must be based on the most recently established balance sheet. Specific rules apply if the company is a so called \u201cparent company\u201d – for example, the requirements that the nature, scope and risks of the group operations on the group’s equity should be taken into account, see section 3 for more information.<\/span><\/p>\n

The provisions regarding illegal value transfer are found in Sections 6 and 7, which refer to the refund obligation and non-liability coverage.<\/span><\/p>\n

Chapter 18 – Profit Distribution<\/span><\/strong><\/p>\n

Chapter 18 controls the distribution of profits in the Swedish Companies Act, the starting point being specifications concerning decisions on dividends which are made at the Annual General Meeting (AGM). Furthermore, the chapter consists of information regarding the preparation of proposals for decisions and the content of the proposal in sections 2 – 3.<\/span><\/p>\n

Provisions regarding the distribution of profits at the request of a minority shareholder are contained in section 11, where it is stated that when the owner of at least one tenth of all shares so requests, the AGM shall decide on the distribution of half of what remains of the year’s profit according to the established balance sheet. Further details can be found in the paragraph above.<\/span><\/p>\n

Chapter 19 – Acquisition of treasury shares etc.<\/span><\/strong><\/p>\n

A share limited company may not subscribe for its own shares. If this occurs, the Board and the Managing Director shall be deemed to have subscribed for the shares on their own account with joint and several liabilities for the payment made. However, this does not apply if a board member or the CEO can show that he was not aware of the share subscription.<\/span><\/p>\n

Section 5 states when a share limited company may acquire its own shares. Accordingly, it is stated in section 7 that a subsidiary may not acquire shares in the parent company.<\/span><\/p>\n

Permitted acquisition methods of shares are stated in section 14, while unauthorized acquisitions are specified in section 16. A resolution of the AGM on the acquisition of own shares is only valid if it has been assisted by shareholders with at least two thirds of both the stated votes and the shares represented at the meeting. The regulations regarding the transfer of treasury shares in a regulated market or a corresponding market outside the European Economic Area can be found in the remaining sections of the chapter.<\/span><\/p>\n

Chapter 20 – Reduction of the share capital and the reserve fund<\/span><\/strong><\/p>\n

This chapter prescribes that the share capital may be reduced to cover loss, provision for free equity, and repayment to the shareholders. Such a reduction decision is made by the AGM. A decision to reduce the share capital must not be made until the company has been registered.<\/span><\/p>\n

When such a decision is made by the AGM, it is only valid if it has been supported by shareholders with at least two thirds of both the votes cast and the shares represented at the AGM.<\/span><\/p>\n

In a proposal for reduction, certain information must be stated, this is stated in \u00a7 7. The Board must notify the decision for registration in the Companies Register within four months of the decision to reduce the share capital.<\/span><\/p>\n

This chapter also regulates the reduction of the reserve fund, with the purposes specified under \u00a7 35 – coverage of the loss, an increase of share capital, and repayment to shareholders or other purposes.<\/span><\/p>\n

Chapter 21 – Loans from the company to shareholders etc.<\/span><\/strong><\/p>\n

The chapter begins by describing that a share limited company may not lend money loans to certain individuals, see \u00a7 1 paragraphs 1\u20135. What is new here (from January 1, 2020) is that these provisions do not apply if the debtor is a municipality, a company or if the loan is intended exclusively for the debtor’s business and the company pays the loan for purely commercial reasons, and if the loan has been raised by The National Debt Office.<\/span><\/p>\n

Furthermore, the chapter regulates loans for the acquisition of shares, and believes that a share limited company may not make advances, loan loans or provide collateral for loans in order for the debtor or any related natural or legal person to acquire shares in the company.<\/span><\/p>\n

If it is true that a share limited company has made advances or provided loans in violation of Chapter 21, the recipient shall return what he has received.<\/span><\/p>\n

Chapter 22 – Redemption of minority shares<\/span><\/strong><\/p>\n

The starting point here is that a shareholder who has more than nine-tenths of the shares in a share limited company is entitled to redeem the remaining shares by the other shareholders in the company. This person is also called the majority shareholder.<\/span><\/p>\n

With regard to the redemption amount, it must be determined so that it corresponds to the price of the share that can be charged on a sale under normal conditions. The right to the redemption amount is presumed to come to the person who submits to the majority shareholder a share letter with a note of transfer or a redemption certificate.<\/span><\/p>\n

If a good person needs to be appointed in these cases, there are special provisions specified in sections 8 – 11.<\/span><\/p>\n

Chapter 23 – Merger of share limited companies<\/span><\/strong><\/p>\n

This chapter is very useful as two or more share limited companies plan to merge. They can do this by taking over all the assets and liabilities of one or more of the companies by another share limited company for consideration to the shareholders of the transferring companies – this is called a merger. Here, the transferring companies dissolve without liquidation. The merger may take place even if the transferring company has gone into liquidation if the transfer of the company’s assets has not begun.<\/span><\/p>\n

A joint and dated merger plan shall be drawn up by the boards of transferor and upon absorption, acquiring companies. The contents of the merger plan are governed by sections 7 – 9. The resolution of the AGM approving the merger plan is only valid if it has been assisted by shareholders with at least two thirds of the stated votes and the shares represented at the meeting, i.e. there is a majority requirement.<\/span><\/p>\n

When the merger plan has become relevant in all companies participating in the merger, all of them must notify their known creditors in writing of the decision.<\/span><\/p>\n

The Board of Directors of the acquiring company shall notify the merger for registration in the Companies Register. This notification replaces the subscription of the shares and shall be made no later than two months from the Swedish Companies Registration Office to execute the merger plan or if the permit is submitted by the general court, from the date that the court’s decision has gained legal force.<\/span><\/p>\n

What is also interesting in this chapter is that, according to section 36, a Swedish share limited liability company may participate in a merger with a corresponding legal person domiciled in another state within the European Economic Area than Sweden – a so-called cross-border merger. It must have been established under the law of a State in this area and has its registered office, its head office or its principal place of business in this area.<\/span><\/p>\n

Chapter 24 – Division of public share limited companies<\/span><\/strong><\/p>\n

Chapter 24 shows that a share limited company can be divided by taking over the company’s assets and liabilities by one or more other share limited companies for consideration to the shareholders of the transferring company – thus dividing. The first section of the chapter describes how a division can be made.<\/span><\/p>\n

However, it is important to remember that division can only take place if the transferring and acquiring companies have the same accounting currency. But division may also occur if the transferring company has gone into liquidation, provided that the transfer of the company’s assets has not begun.<\/span><\/p>\n

The boards of the transferor and the acquirer (s) shall establish a joint, dated divisional plan – the contents of this plan can be found in \u00a7 8. A resolution of the AGM approving the plan is only valid if it has been supported by shareholders with at least two thirds of the votes cast as the shares represented at the meeting – therefore there is a majority requirement here as well.<\/span>[\/vc_column_text][\/vc_column][\/vc_row][vc_row][vc_column]\t

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