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[ESTABLISHING A BUSINESS ENTITY IN SWEDEN]
ESTABLISHING A BUSINESS ENTITY IN SWEDEN 1. INTRODUCTION TO THE VARIOUS AVAILABLE LEGAL ENTITY TYPES The most common form of legal entity to start a newco in Sweden is through a Limited Liability Company (Sw. Aktiebolag). There are, however, other types of legal entities available that may be better suited for your business. This first section will provide a short introduction to the various entity types. Limited Liability Company A Limited Liability Company is a form of legal entity where the responsibility of any given shareholder, normally, is limited to the capital invested in the company, i.e., the shareholders are not personally liable for the debts of the company. Under Swedish law, the board of directors and, where applicable, the managing director, are legally responsible for the organisation of the company and the management of the company’s affairs. The share capital of a private Limited Liability Company shall be a minimum of SEK 25 000 and the share capital of a public Limited Liability Company shall be a minimum of SEK 500 000. The company shall use SEK or EUR as its accounting currency. One key advantage to a Swedish limited liability company compared to many other jurisdictions throughout Europe is that there is a possibility to have different share classes with different capital and voting powers (e.g., “A” and “B” shares). Sole Trader If you are considering starting a small business (managed by one person and on your own), a Sole Trader (Sw. Enskild firma) could be a suitable form of business, although not possible in a cross-border context. As a Sole Trader, you are personally responsible for all the company’s obligations, such as debts and
agreements. No investment of capital is required. Trading Partnership If at least two natural persons and/or legal entities are considering starting a business together a Trading Partnership (Sw. Handelsbolag) is an alternative. The Trading Partnership is an independent tax unit, but the partners are personally, jointly, and severally liable for the company’s debts. No investment of capital is required. A Trading Partnership exists where two or more persons have agreed to engage in business jointly and the partnership has been registered in the trade register. Limited Partnerships A specific form of Trading Partnership is Limited Partnership (Sw. Kommanditbolag). A Limited Partnership must have two or more partners, one of which must be a General Partner and one of which must be a Limited Partner. A Limited Liability Company may be the General Partner in a Limited Partnership. For the General Partner, no investment of capital is required. For the Limited Partner, an investment or undertaking of investment is required, however, it can be a purely symbolical amount (such as SEK 1). The Limited Partner is not responsible for obligations of the partnership in excess of the capital they have contributed or undertaken to contribute, whereas the General Partner is liable for all the obligations in the partnership. 2. BRIEF OVERVIEW OF STEPS TO CONSIDER FOR ESTABLISHING EACH BUSINESS ENTITY TYPE Limited Liability Company Firstly, it should be noted that almost all legal entities that Hellström Law establishes for our clients are Aktiebolag, i.e., Limited Liability
ILN Corporate Group – Establishing a Business Entity Series
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