Disclaimer: This article is intended for informational purposes only and should not be interpreted as legal advice. It is recommended to consult with a qualified professional for specific legal guidance.
The Swedish Companies Act (Aktiebolagslagen, ABL) contains rules that apply specifically to limited liability companies (aktiebolag).
The ABL is also the most important law for a company. Its purpose is to provide the company with the best possible conditions to generate profit for its owners — naturally within the boundaries of Swedish civil and criminal law.
The ABL regulates how companies may be founded, structured, operated, and dissolved. It addresses the responsibilities of the owners, how assets and shares may be handled, and the relationship between majority and minority shareholders.
The first Swedish Companies Act was adopted on October 6, 1848.
Mandatory and Default (Dispositive) Rules
The ABL contains a number of mandatory rules. These are designed to protect the company, its shareholders, and other stakeholders such as customers, suppliers, lenders, authorities, and others.
It also contains default (dispositive) rules.
These allow the shareholders to decide together on certain governance rules for the company. Such rules are incorporated into the company's articles of association. However, dispositive rules cannot override mandatory rules set forth in the ABL or other laws.
Liability for Damages – Founders, Board Members, and CEO
Both mandatory and default rules in the ABL can result in liability for damages for founders, board members, and the CEO.
If these representatives, in the performance of their duties, intentionally or negligently cause harm to the company, they must jointly compensate for the damage.
The same applies if harm is caused to a shareholder or any other party through a violation of:
The Companies Act,
Applicable accounting laws, or
The company's articles of association.
Penalties and Fines
Penalties and fines may be imposed for violations of certain mandatory rules, including:
Violation of offering restrictions:
A private limited company, or a shareholder therein, may not advertise or otherwise offer shares, subscription rights, debentures, or warrants issued by the company to the publicGenerally, offerings may not be made to more than 200 persons unless the offer is directed at a pre-registered group of interested parties. (See ABL Chapter 1, Section 7.)
Prohibition against trading:
Shares or other securities of a private limited company may not be traded on a regulated market or equivalent marketplace. (See ABL Chapter 1, Section 8.)Failure to maintain a share ledger:
It is a violation to intentionally or negligently fail to maintain or make the share ledger available. (See ABL Chapter 5.)Failure to convene a board meeting:
A director or the CEO must convene a board meeting if requested by another director. Board decisions must not be made without allowing all directors to participate and receive adequate decision material. (See ABL Chapter 8, Sections 18, 20, and 21.)Prohibited loans:
It is forbidden to grant loans or security for loans to shareholders, board members, the CEO, or their close relatives, especially if the purpose is to finance acquisition of shares in the company or a parent company.
Companies must maintain a special register of permitted loans and securities that are exceptions. (See ABL Chapter 21, Sections 1, 3, 5, and 10.)
Payment Responsibility for Shareholders
In a limited liability company, shareholders generally have no personal liability for the company’s obligations.
Typically, shareholders risk only the capital they have invested.
However, personal liability may arise in cases such as:
Liquidation due to capital deficiency, or
If a shareholder intentionally or through gross negligence contributes to a violation of the Companies Act, applicable accounting laws, or the articles of association.
Thus, it is very important for shareholders, board members, and the CEO to be well-informed about the requirements of the Companies Act and the company's articles of association.