SWEDEN Law and Practice Contributed by: Johannes Wårdman and Erik Frykenholt, CMS Wistrand
1. Market Conditions 1.1 Geopolitical and Economic Factors In Sweden, interest in joint ventures (JVs) is grow - ing across most sectors. Although geopolitical chal - lenges, the war in Ukraine, and fluctuations in inter - est rates continue to influence the Swedish economy, there remains a consistently strong appetite for estab - lishing JV structures in Sweden. One of the main driv - ers for setting up a JV is to share costs and risks between the parties involved. This can be linked to increasing macroeconomic and political risk, which has made investors more cautious. Another possible reason for the increased interest is that banks and financial institutions have become more restrictive about offering financing, meaning that alternative sources of funding are needed for new companies and collaborations. The increase in JVs can be observed both in traditional industries and in more disruptive, emerging markets. Given the market trends and the current financial and political landscape, it is anticipated that the interest in JVs will continue to increase over the next year. 1.2 Industry Trends and Emerging Technologies While JV activity has remained strong across most sectors in Sweden, there has been a notable increase in the use of JV structures within real estate projects. These arrangements are often designed to distribute ownership among developers, property management companies, and tenants. The rise in such structures appears to be driven partly by a growing interest in sharing both risks and financing costs, and partly by the desire to involve and commit all parties at an early stage of the project, while also enabling them to share in the resulting profits.
of ways and can be tailored based on the needs and intentions of the co-operating partners. In principle, there are two general methods of struc - turing a JV: either through a purely contractual part - nership or through an entity-based partnership (ie, a corporate vehicle). The simplest form of establishing a JV is through a contractual partnership by way of a co-operation agreement establishing the scope of the venture, the obligations and commitments of the partners and any other specific terms concerning the partnership. Using this structure, there are no requirements for equity participation and the parties are able to freely tailor the terms of the JV. As no regulatory provisions pertaining to this structure exist under Swedish law, the general principle of freedom of contracts applies. For partners wishing to collaborate on a temporary basis only, for a particular project, and without the need for a specific allocation of assets, a purely contractual partnership may be sufficient. However, should the agreement include a mutual intention of incorporation and oblige the partners to facilitate such intention, the agreement itself could constitute a non-registered partnership in accordance with the Partnership and Non-registered Partnerships Act, which would entail the application of certain statutory provisions to the contractual partner - ship as a non-registered partnership. A non-registered partnership is not a separate legal entity and may not assume rights and obligations. The partners to the non-registered partnership will be liable for all obliga - tions and debts arising from the JV. A more prevalent and legally structured approach offering greater predictability is an entity-based part - nership utilising any available corporate vehicle that permits co-ownership, such as a limited liability com - pany, a general partnership, a limited partnership, a co-operative association or a non-registered partner - ship. These entity-based JVs may be more suited to partners intending to engage with each other over longer periods of time and with a need to structure the management, allocation of profits and ownership of assets in a more predictable way. All of the above- mentioned entity-based JVs (with the exception of a non-registered partnership) constitute separate legal entities with legal competence to enter into agree -
2. JV Structure and Strategy 2.1 Typical JV Structures
In Sweden, the term “joint venture” lacks a specific legal definition and hence there are no regulatory requirements concerning the structure of the JV as such. As a result, JVs may be structured in a number
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