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Incorporation

Setting up a company in Sweden

When setting up a company you may want to consider these factors:

  1. Geographic Location

    Given that the country consists largely of islands and coastal cities, choice of geographic location may be a significant decision.

  2. Language

    The official language of Sweden is Swedish, however, there are also small Sami and Finnish speaking minorities. An extremely high proportion of the Swedish population speak fluent English, topping the English Proficiency Index for the past two years. However, some elements of the requisite paperwork may require completion in Swedish.

  3. Culture

    Sweden is known for its socially progressive culture, having embraced feminist, anti-racist and anti-fascist views. Given that approximately one-fifth of the population are immigrants or have a parent born outside Sweden, the nation is also well known for its multiculturalism and tolerance towards foreigners.

Your Options

Company law in Sweden allows for several kinds of businesses to be set up, the most prominent forms being a branch of a foreign company or a limited company. There are two subcategories of limited companies – public and private – where only public limited companies may raise capital through share or security issues and can be listed on a public exchange.

Foreign Company branch

Foreign companies may elect to conduct their business in Sweden through a Swedish branch. This is not a separate legal entity, but rather an extension of the existing company. The foreign company therefore bears any rights and liabilities of the branch, but is subject to Swedish law and the decisions of Swedish authorities. A foreign company may only set up a maximum of one branch in Sweden.

The initial registration procedure for establishing a foreign company branch is as follows.

An application is submitted for registration to the Swedish Companies Registration Office. The application form must include details of both the foreign company and the branch that the company is seeking to register in Sweden, as well as the proposed name of the foreign branch and details of any individuals who are authorised any claims related to the branch and are able to represent the foreign company when associated matters of business arrive. The application must also state the nationality of the company, its legal form, registered office and postal address. Proof of non-bankruptcy and the most recent two annual reports are also required documentation. The application fee of SEK 2,000 must be paid upon submission of documents, and is not subject to VAT. If the application is complete, the Swedish Companies Registration Office will usually complete the process in two weeks from when the application is made – this may, however, take longer depending on the circumstances.

Upon completion of the registration process, the branch will be given a ten-digit registration number that serves as the identification number of the branch for the entirety of its existence. Once the registration number has been received, the branch may commence business operations.

The accounting records of a foreign branch must be kept separate from those of the company. The annual accounts of the foreign company and branch may need to be regularly submitted to the Swedish Companies Registration Office depending on the circumstances.

Public Limited Company

To establish a limited company in Sweden, the options are to either incorporate a new limited company, or buy an existing limited company. The latter option is usually the easiest way and can be completed in a day or two. Limited companies can be either public or private, although the registration processes are very similar excluding issues like fees, the board of directors and company name.

Public limited companies are required to have a minimum starting share capital of SEK 500,000, which can be denominated in either Euros or Swedish Krona.

To register a new limited company, there are several documents and forms which must be lodged with the Companies Registration Office. Prior to registration, the company is not allowed to undertake any legal acts or start any business activities.

The fee for registering a limited company is SEK 2,200. In addition to the registration form, a memorandum of association and articles of association must be included in the application, as well as either a bank statement of the share capital, if the shares have been paid for in cash, or a statement for the auditor, if the shares have been paid for with any asset other than cash.

Registration is usually completed within 2-3 weeks of the application being lodged to the Companies Registration Office. This may take longer if there are restrictions in regards to the company name, which must distinguish the company from any other companies in the market. Once registered, the business will receive a registration number and may commence business. Businesses are advised to ensure their name is original and not already in use before applying. If the limited company is public, this is to be indicated in the company name.

Public limited companies must have at least three directors – if more, one must be appointed chairman. If none of the aforementioned individuals are Swedish residents, the board must appoint a Swedish resident to act as an agent for service of process on the company’s behalf.

To close a public limited company, there are five options:

  • Selling: selling all shares.
  • Liquidation: may be voluntary (action taken by shareholders at a general meeting) or compulsory (when the Companies Registration Office or a court orders the limited company must go into liquidation)
  • Bankruptcy: an application for bankruptcy can be made either by the company or a creditor, filed to the district court.
  • Merger: This can be either through absorption of a wholly owned subsidiary, absorption, or formation of a new company.
  • Division: This can be either a complete or partial demerger.

 

Private Limited Company

Whilst very similar to the process of setting a public limited company, there are some differences with regards to fees, directorial boards and the naming of companies.

Private limited companies are required to have a minimum starting share capital of SEK 50,000.

The board of directors for a private limited company may consist of 1 or more directors; if there are more than two ordinary directors, then one deputy director must be appointed. If none of the aforementioned individuals are Swedish residents, the board must appoint a Swedish resident to act as an agent for service of process on the company’s behalf.

To close a private limited company, there are five options:

  • Selling: selling all shares.
  • Liquidation: may be voluntary (action taken by shareholders at a general meeting) or compulsory (when the Companies Registration Office or a court orders the limited company must go into liquidation)
  • Bankruptcy: an application for bankruptcy can be made either by the company or a creditor, filed to the district court.
  • Merger: This can be either through absorption of a wholly owned subsidiary, absorption, or formation of a new company.
  • Division: This can be either a complete or partial demerger.
Private limited company Public limited company
Can sell shares to the public No Yes
Minimum share capital SEK 50,000 SEK 500,000
Minimum amount of board members 1 member 3 members
Managing director Optional Mandatory
Auditor Recommended and sometimes mandatory Mandatory

Outsourcing Employment Through a GEO Employer of Record Service

Whether to incorporate in Sweden and what sort of entity to set up are just two of the many choices companies must make when expanding into a new market.

If the company intends to have staff in Sweden they must also decide whether they will administer that employment internally or use a Global Employment Organization to handle payroll and Employer of Record responsibilities.  A GEO Employer of Record solution is an attractive alternative where

  • the company is looking to setup an office quickly
  • the company wants to work within a defined budget
  • the company wants to limit its initial commitment in Sweden
  • the company needs help with tax, employment, immigration and payroll compliance in Sweden

The complexity of employment regulations in Sweden makes the use of a GEO advisable coupled with local legal counsel to ensure full compliance with employment laws, for example the drafting of local contracts for workers.

Shield GEO provides a comprehensive service in Sweden allowing companies to deploy their staff quickly with reasonable, clearly stated costs and timeframes. The company contracts directly with Shield to employ and payroll their staff on their behalf in Sweden.

Shield GEO then becomes the Employer of Record. Shield GEO assumes the legal responsibility for these employees, sponsoring them on work permits, complying with local employment law and running their monthly payroll. Using Shield GEO is the fastest and most cost effective way to deploy local and foreign workers into Sweden. Read more about outsourced employment through Shield GEO.

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