Company Formation in Sweden

Guidelines to Establish
Limited Liability Company in Sweden

Foreign companies establishing a business in Sweden most commonly form subsidiaries in the form of limited liability companies (corporations).

A limited liability company is a legal entity, with a clear distinction between the company and the owners. The limited company can enter into agreements; has its own property (for example real estate) or other assets of its own. The limited liability company can also be a party in a legal proceeding. The limited liability company must always have a minimum of 100,000 SEK in share capital.

Private and Public Limited Liability Companies

A limited liability company can be either private or public. There are some differences between the two where regulation is concer¬ned.

Public Limited Liability Companies

A public limited liability companies can offer shares and other securities to the public, for example by advertising in media for new shareholders (e.g. new capital).

In a public limited liability company there must be at least 3 board members and an optional amount of deputy members. It is also compulsory to appoint a managing director and that must not be the same person that holds the title of chairman of the board. The minimum of share capital is 500,000 SEK.

Private Limited Liability Companies

In a private limited liability company there must be at least 1-2 members of the board and at least 1 deputy member or alternatively 3 members of the board. In the latter case the appointment of one or more deputy members is optional. A managing director is not com¬pulsory in a private limited liability company, but in case a managing director is appointed it may very well be the chairman. A chairman can only be appointed if the board consists of more than one member. The minimum of share capital is 100,000 SEK.

A private limited liability company may not introduce its shares on the stock exchange or any other organized market.

Requirements to Become a Founder

One or more founders form a limited liabi¬lity company. Since one individual or legal entity may own all the shares in a limited lia¬bility company, only one founder is required. Founders are not required to subscribe to or own shares in the company.

A founder may be an individual resident in the European Economic Area (EEA), a Swedish legal entity or a legal entity which is incorporated pursuant to the laws of a mem¬ber state of EEA and which has its registered office, its headquarters or its principal place of business within the EEA.

A partnership, which is formed pursuant to the laws of a member state of the EEA, may also act as a founder, if each partner with unlimited liability is resident within the area. Residents from outside the EEA may act as founders only after obtaining approval from the Swedish Companies Registration Office (Bolagsverket).

A founder must be an adult (18 years of age) and must not have a custodian pursu¬ant to Chapter 11, Section 7, of the Parental Code (Föräldrabalken), nor be in a state of bankruptcy. Nor may a person who has been declared subject to a trade prohibition pursu¬ant to Section 6 of the Trading Prohibition Act (Lag om näringsförbud) be a founder.

Main Features

A limited company has three important parts
Board of directors
Registered or chartered accountants.

The shareholders invest capital and decide on the basic rules for the company. They elect the management and the accountant. The risk for the shareholder lies in loosing their own invested share capital. There are, howe¬ver, some obligations that are of a personal character, for example the annual account that has to be signed by the managing director and the board of directors together.


A limited company in Sweden shall normally have a managing director and a board of directors. A managing director must reside in the EEA, otherwise a special exemp¬tion is granted. It is up to the management to handle the operations and to represent the company in day-to-day work. A public limited liability company as well as a private limited liability company that has two or more board members must also appoint a chairman of the board. The chairman leads the work of the board of directors and ensures that the board members fulfill their obligations. At least half of the board members must be resident in the EEA. If none resides in Sweden, the board must appoint a Swedish resident to accept service on the company’s behalf. A person authorized to sign for the company can be appointed outside the group of the (deputy) members of the board.

Board members or the managing director are liable for damages if they willfully or neg¬ligently cause the company damage when performing their duties. Board members and the managing director are also liable if a shareholder or another person suffers dama¬ges through a violation of the Companies Act (Aktiebolagslagen) or the articles of associa¬tion. If two or more persons are liable for the same damage, they are jointly and severally liable.

Accounts and Audits

All companies carrying on a business activity are under an obligation to maintain accoun¬ting records under the Bookkeeping Act (1976:1259) and are required by the Act to adhere to generally accepted accounting principles. The annual accounts must be sent to the Swedish Companies Registration Office 11 months at the latest after the termination of the fiscal year or the company could be liqui¬dated. Failure to send in the annual account in time is regarded as a bookkeeping violation in Sweden and the company is then conse¬quently charged with a penalty for delay.

At least one in Sweden authorized (certified) public accountant or an approved accountant or a registered accounting firm must audit the administration and accounts of the limited liability company. Companies of a certain size, at present those with total assets of more than 38 million SEK and with more than 200 employees, or companies listed on the stock exchange, must appoint a chartered accountant. The auditor is obliged to ensure that the company’s management follows the provisions in the Companies Act and the articles of association.

The managing director of the limited liability company must annually submit to the Swedish Companies Registration Office an annual account including an income statement, a balance sheet, notes on the accounts and an administration report. Large companies and groups should also present a statement of changes in financial position. Comparative figures for the preceding years should always be presented. When applicable a consolidated financial statement must also be sent in. All documents must be written in Swedish.

The annual report must be submitted to the company’s auditor no later than six weeks before the general meeting. If copies of the annual report and the auditor’s report have not been sent to the Swedish Companies Registration Office within 15 months after the end of the financial year, the board members and the managing director become jointly and severally liable for obligations that the company incurs.

Forming a Limited Liability Company

One or more persons shall put together and sign a dated deed of foundation. The charter of foundation must contain a draft of the artic¬les of association, information about the cost of each share and the date when the shares must be paid. A statutory meeting must be held in order to elect the board of directors and the accountant. The decision about for¬ming the company and approve of the articles of association must also be made. All these documents together with the filled in applica¬tion form for registering a limited company are to be sent to the Swedish Companies Regist¬ration Office. An application for registration of the company must be submitted to the Swedish Companies Registration Office within six months from the date of signing the deed of foundation. There must be a statement from a Swedish banking institution attached to the application, certifying that the total cash amount to be paid for shares has been deposited in an account with the bank.

Buying an “Off The Shelf” Company

Some foreign companies may feel that regist¬ration of a limited liability company may be too complicated or take too much time. Therefore, the easiest and most common way of setting up a subsidiary in Sweden is to purchase a so-called “off-the-shelf company” from a company agent or law firm. Many law firms in Sweden have “off-the-shelf companies” available to enable a fast start-up process. Buying an “off-the-shelf” com¬pany means that many of the registration procedures at the Swedish Companies Registration Office described above already has been taken care of and the company can start its business immediately. However, the company still has to register a new name (see below).

Registration of a Limited Liability Company

The company must be registered with the Swedish Companies Registration Office. Before registration the company is non-existent and can therefore not enter any agreements whatsoever or start any business activities. When the registration is finalized, the Swedish Companies Registration Office must immediately make an announcement of these entries in the Swedish Official Gazette (Post- och Inrikes Tidningar). When the registration procedure is complete the limited liability company will receive a registration number, which is used as the company’s identification number and remains as long as the company exists. The registration number must appear on the company’s letterhead, invoices and order forms.

Registration Name

The company name must be registered with the Swedish Companies Registration Office in order to be protected. The name protection for a limited liability company is valid for Sweden and for the business activity that the company has registered. There are certain rules to be adhered to, such as the company name not being similar to any other registered company name or trade mark, not to be misleading or to describe only the activity of the company. The company’s name must include the Swedish word for limited liability company, aktiebolag, or the abbreviation AB.

Registration for Taxes

Employers must register as such by filling in the form Skatte- och avgiftsanmälan (Noti¬fication of Tax and Contributions Liability (RSV 4620) and send it to the Swedish Tax Agency. On registration the employer will automatically be sent all the documents, VAT and PAYE returns and information required to account for and pay in VAT, income tax and social contributions.

Short Summary of Tax Obligations

Income tax for legal entities
Legal entities are subject to a tax of 28 percent of their taxable income. This tax is calculated on a preliminary basis by the tax authority and is charged regularly throughout the fiscal year.

1. Company law: The Companies Act (2005:551).
2. Types of company:
(a) type of company preferred for international transactions: Aktiebolag, abbreviated AB a limited liability company that may be private or public, the latter may arrange for financing from the public by being listed or by raising public debt.
(b) shareless companies: Sole proprietorships, partnerships and limited partnerships.
3. Capital requirements: Private AB: SEK 100,000 (approx EUR11,000)
Public AB: SEK 500,000 (approx EUR55,000).
4. Taxation rates applied to companies generally: General income tax rate 28%. Income from dividends and capital gains relating to holdings of unlisted shares is tax exempt.
(a) the taxation of companies in 2 (a)
5. Method of incorporation: By founder’s deed, election of board and auditor, payment of share capital.
6. Who may incorporate – specify what, if any, local representatives/ professionals required? Anyone of legal age who is not because of previous bankruptcies or similar precluded from conducting business may incorporate. For foreign founders, it is advisable to retain the services of a professional company management firm or lawyer to assist with incorporation.
(a) are ready made companies available? Yes.
7. Length of time to incorporate: Depending on workload of Companies Register: two to five weeks. (Shelf companies may be bought within a couple of days.)
8. Minimum members: One.
9. Registered office: Yes, as long as in Sweden. Banks do not offer domiciliation and most lawyers do not.
(a)Can the registered office be a bank/ lawyer/ accountant’s office (brass plate)?
10. Directors and secretary:
(a) Must a director/ secretary be resident? A minimum of half the number of directors and deputy directors must be resident within the EEA.
(b) Are Corporate Directors allowed? No.
11. Appointee directors/ secretary possible? Yes ( Sweden has no requirement for a company secretary).
12. Meetings: No mandatory number but decisions of the board shall be reflected in minutes of meetings. Meetings may be held by telephone.
13. Annual return: Yes.
(a) Must financial statements of a company be audited?
18. Is disclosure of profits required by filing balance sheets with annual returns? Yes.
19. Are there any exchange control or other financial restraints imposed upon a company? Reporting duty to banks for larger payments abroad.
20. Companies formed in the last year: 24,000 were formed in 2006.
21. Number of companies on the company register altogether: 310,000.
22. How, if any, is migration into and out of the jurisdiction achieved? Re-domiciliation not permissible.
23. Is migration out of your country provided for? Re-domiciliation not permissible.
24. Any amendments to company law over the last 12 months: No material changes.
25. Anticipated amendments to company law over the next 12 months: No material changes.

A Swedish subsidiary is established as a limited liability company (Aktiebolag) with one or more shareholders as owners, who can be individuals or a legal entity.

A limited liability company is a legal entity and can own property, enter into agreements and employ personnel.

PRV, Swedish Patent and Registration Office, registers corporate data when establishing a business in Sweden. The PRV Web site contains information on different business forms and regulations for establishing a business. Most information is in Swedish, but some is also translated into English.

*Note: EEA consists of all EU nations, plus Iceland, Liechtenstein, Norway, and Switzerland.

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