SWEDEN Law and Practice Contributed by: Johannes Wårdman and Erik Frykenholt, CMS Wistrand
ments and undertake rights and obligations, the most common of which is the private limited liability com - pany. Limited Liability Company For the purposes of establishing a JV, the most rel - evant and commonly used structure is the private limited liability company. Hence, factors solely per - taining to public limited liability companies have been excluded from this chapter. A private limited liability company must have a mini - mum share capital of SEK25,000 and be registered at the Swedish Companies Registration Office (SCRO) and the Swedish Tax Agency. The most common and efficient method of setting up a JV through a private limited liability company is by purchasing a dormant shelf company and allocating the shares in said com - pany to the partners in proportion to their financial, or other, contribution. One of the main advantages of establishing a JV in this manner is that the share - holders are generally not liable for the company’s debts and liabilities. Proceeds may be allocated to the shareholders through dividends in relation to the rights connected with the shares of each shareholder. On the other hand, a limited liability company is obli - gated to keep accounts and submit (generally audited) annual reports to the SCRO, which become publicly available upon submission. General Partnership A general partnership, like the limited liability com - pany, constitutes its own separate legal entity able to enter into agreements, undertake rights and obliga - tions, own property and appear in court. A general partnership does not require any share capital and is not subject to any other requirements regarding the capitalisation of the entity. However, the liability of the general partnership is not limited to its own financials and the partners may therefore be held liable should the entity be unable to pay its debts. The partners’ liability in respect of the general partnership is joint and several. A general partnership is based upon a contractual relationship between the partners with the intention to jointly engage in business, and is formed through the registration of such a partnership with the SCRO
and the Swedish Tax Agency. The partnership is rep - resented by each of the partners unless regulated otherwise in the partnership agreement or through a general power of attorney registered with the SCRO, and, unless the partnership agreement states other - wise, the allocation of proceeds follows the general principle of equal distribution. This structure for a JV allows for easy incorporation without the express need for the partners to contribute financially, while exposing the partners to a potential financial risk if the partnership were to default on its debts. Limited Partnership The limited partnership is similar to the general part - nership, and the same general principles as mentioned earlier apply. A fundamental difference, however, is that some of the partners’ liability (limited partners) is limited to their financial contributions (which must be at least SEK1), whereas at least one partner (general partner) is liable for all the partnership’s debts and liabilities without limitation. The general and limited partners must be registered with the SCRO. Furthermore, the limited partnership is represented by the general partner and unless the limited partners have a registered power of attorney they may not rep - resent the JV against third parties. Co-Operative Association A co-operative association constitutes a legal entity and may enter into agreements, undertake rights and obligations, own property and appear in court. A co- operative association may be founded by at least three operating partners which may be either legal entities or physical persons. A co-operative associa - tion is governed by its registered articles of asso - ciation which also regulate the financial contribution required by each partner. The amount of the financial contribution may be determined by the partners and each partner’s liability is limited to their contribution. The co-operative association is represented by a board of at least three directors appointed by the association meeting. The co-operative association is required to appoint and register an auditor, keep accounting records and submit annual reports. Pro -
143 CHAMBERS.COM
Powered by FlippingBook