Conversion or transformation of shares means changing shares of one class into another class of shares. This new class may be an existing one or a completely new one. The conversion can involve all shares of a particular class or specific share holdings.
If the company has several types of shares, you can include a provision in the articles of association stating that a certain class of shares can be converted into another class. This provision may also apply to converting certain shares if a specific event occurs or under certain conditions.
If a share is converted, it must be immediately reported to the Swedish Companies Registration Office (Bolagsverket) for registration. The notification must state which classes of shares are involved in the conversion and how many shares of each class are being converted. The conversion is complete once it has been registered by Bolagsverket and recorded in the share ledger at NVR.
It is important to note that if existing shares are altered to grant different rights to dividends, they are considered sold, which may have tax consequences for the shareholders. In these cases, it should also be noted that differentiated dividends could result in part of the dividend being considered employment income by the Swedish Tax Agency (Skatteverket).