SWEDEN Law and Practice Contributed by: Johannes Wårdman and Erik Frykenholt, CMS Wistrand
The general principle in the Companies Act is, how - ever, optional, and the JV participants usually agree on an exit strategy in the JV agreement when enter - ing into the JV. Such exit provisions usually contain both transfer restrictions and drag-along rights to be enforced in certain situations or by a certain major - ity, although it should be noted that overly restrictive transfer restrictions are generally prohibited. In order to avoid deadlocks, the JV agreement may include reciprocal drag- and tag-along rights that may be enforced in a trade sale, IPO or other transfers of the JV or its assets. In order to ensure control over the JV and avoid unwanted new JV participants, the JV agreement usually includes a right of first refusal for the non-transferring party to acquire the shares instead of allowing a new shareholder.
The JV agreement and the exit provisions therein shall always be tailored to suit the needs and intentions of the JV and the JV participants.
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