SWEDEN Trends and Developments Contributed by: Johannes Wårdman and Erik Frykenholt, CMS Wistrand
A strong industrial base with global reach Manufacturing and industrial production remain at the core of the Swedish economy, accounting for approxi - mately 70% of the country’s total export value. Key sectors include automotive, heavy machinery, tel - ecommunications, pharmaceuticals and cleantech. The presence of globally active corporations – such as Volvo Group, ABB, Ericsson and SKF – provides fertile ground for collaborative ventures, particularly where smaller or foreign entities seek to gain market access, scale or operational synergies. JVs are commonly used to bridge competencies in this context: for example, combining industrial manu - facturing capabilities with digital or software exper - tise, or aligning traditional engineering strengths with cutting-edge environmental technologies. Legal Landscape for JVs in Sweden Sweden provides a flexible and commercially enabling legal environment for the formation and operation of JVs. While Swedish law does not offer a formal def - inition of what constitutes a JV, it allows parties to structure their collaboration in a manner that suits the specific commercial needs and duration of the part - nership. However, JV structures in Sweden must still navigate a number of important legal considerations, including corporate form, foreign direct investment (FDI) screening and competition law compliance. Structuring a JV As Swedish law does not prescribe any mandatory JV structure, parties may opt for either a purely contrac - tual arrangement or an entity-based model. • Contractual-based JVs rely on co-operation agree - ments outlining the scope of the project, contribu - tions, responsibilities and governance. These are often used for time-limited projects with no inten - tion of pooling assets or forming a separate legal entity. While there are no specific statutory require - ments for such arrangements, they may under certain circumstances fall under the Partnership and Non-registered Partnerships Act if the agree - ment implies mutual business intentions, thereby triggering specific legal consequences. • Entity-based JVs, by contrast, involve the creation of a separate legal entity. The most common cor -
porate vehicle is a private limited liability company ( aktiebolag ), which provides limited liability for shareholders and allows for structured governance, profit allocation and asset ownership. Other forms of corporate vehicles include general partnerships, limited partnerships and co-operative associations – each with distinct liability, capital and registration implications. The private limited liability company remains the most frequently used structure, often established by acquiring a shelf company and allocating shares in proportion to each partner’s contribution. While this form offers liability protection, it also entails statutory obligations such as registration, accounting and pub - lic reporting requirements. FDI screening and the Protective Security Act Since 2023, Sweden has introduced a national secu - rity review regime under the Swedish Screening of Foreign Direct Investments Act (2023:560) (the “FDI Act”). The FDI Act grants the Swedish Inspectorate of Strategic Products (ISP) authority to review foreign and domestic investments in activities deemed worthy of protection – typically involving critical infrastructure, sensitive technologies or national security concerns. The FDI Act applies regardless of the corporate struc - ture used and notification to ISP is mandatory where an investor gains control or material influence over a protected activity. The obligation to notify lies with the investor, although the target company must inform the investor of this requirement where applicable. The ISP may either prohibit a proposed investment or approve it with conditions. Any transaction com - pleted in violation of the screening requirement may be rendered legally invalid. Notably, the ISP may impose administrative sanctions of up to SEK100 million for non-compliance. Foreign JV partners con - sidering Swedish collaborations in sensitive sectors should therefore conduct early-stage FDI analysis and engage with counsel to avoid potential delays or enforcement risks. Similar to the FDI Act, but with a narrower scope, is the Swedish Protective Security Act (2018:585) (the “PSA Act”). The screening carried out under the PSA
157 CHAMBERS.COM
Powered by FlippingBook