SWEDEN Law and Practice Contributed by: Johannes Wårdman and Erik Frykenholt, CMS Wistrand
3. JV Regulation 3.1 Legal Framework and Regulatory Bodies As mentioned previously, the term “joint venture” lacks a specific legal definition in Sweden and there are no specific regulatory requirements pertaining to the structure of a JV. Therefore, the structure and type of JV determine the primary regulator and the main statutory provisions. The most frequently used corporate vehicle for JVs is a private limited liability company. Private limited liability companies need to be registered at the SCRO and the Swedish Tax Agency. Given that a limited lia - bility company is generally obliged to keep accounts and submit audited annual accounts to the SCRO, it can be said that the primary regulators are the SCRO and the Swedish Tax Agency. If the partners to the JV are two limited liability companies, they may have to report the JV to the Swedish Competition Authority (SCA) pre-registration (see 3.4 Competition Law and Antitrust and 5.2 Disclosure Obligations ). Depend - ing on the business and operations of the JV, other regulators and statutory provisions may be relevant in order to ensure the JV’s compliance in specific busi - ness sectors. 3.2 Anti-Money Laundering Compliance There are two main statutes that regulate money laun - dering in Sweden. The first is the Money Laundering Act, and the second is the Act on Penalties for Mon - ey Laundering Offences. The former aims to prevent financial and other commercial activities from being exploited for money laundering or terrorist financing purposes and is based on the Fifth EU Anti-Money Laundering Directive. The latter contains criminal law provisions relating to money laundering. In general, the Swedish AML regulations apply to certain types of businesses where the operator is required to gather information about their customers (KYC) and to report suspicions of money laundering or terrorist financing to the authorities. All entities may be required to answer questions and provide information to such business operators in order to comply with the AML regulation when requesting products or services.
3.3 Sanctions, National Security and Foreign Investment Controls The Swedish Screening of Foreign Direct Investments Act (2023:560) (the “FDI Act”) authorises the Swed - ish Inspectorate of Strategic Products (ISP) to screen foreign direct investments (FDIs) in activities worthy of protection. The FDI Act stipulates that a particular screening procedure must be undertaken prior to an investment, in which an investor (whether domestic or foreign) acquires a specified level of influence over, or assumes control of, a protected activity. Activi - ties may be considered protection-worthy across most industries and are not limited to any specific type of business. However, such activities must be of national interest and are more common in industries such as infrastructure, energy, finance, healthcare and advanced technologies. The FDI Act is applicable irrespective of the corporate vehicle used to undertake the protected activity. Any individual or entity intending to invest, either directly or indirectly, in activities that fall under the purview of the FDI Act is required to notify the ISP. The obligation to notify is applicable to all investors, irrespective of nationality or domicile, provided that a certain level of influence has been attained. Conversely, the company subject to the investment must inform potential inves - tors of the aforementioned obligation to notify (if such obligation exists). The ISP is entitled to either prohibit the FDI or to impose specific conditions in conjunction with the granting of authorisation. Should an investment be prohibited, any legal act forming part of the invest - ment or having the purpose of realising the invest - ment will be rendered invalid. Furthermore, the ISP is entitled to issue penalties of up to SEK100 million for instances of non-compliance. 3.4 Competition Law and Antitrust Several competition law considerations are relevant for the formation and operation of a JV. Initially, the establishment of a “full-function” JV must be notified and cleared by the competition authority if certain turnover thresholds are met by the parent company. A JV is normally considered to be full func - tion when it does not merely perform tasks for its par -
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