SWEDEN Law and Practice Contributed by: Louise Rodebjer, Ólafur Steindórsson, Per Dalemo and Johannes Wårdman, CMS Wistrand
6.7 Types of Deal Security Measures Private M&A Transactions In private transactions, the parties are generally free
majority requirements that differ from those set out in the Swedish Companies Act. These requirements may require a qualified majority or unanimity for certain decisions, but may also allow a lower voting thresh - old than would otherwise apply. However, for certain decisions, the law sets a minimum voting threshold that cannot be lowered by the articles of association. Furthermore, holding two thirds of the shares gives a shareholder the power to pass major corporate resolu - tions, including amendments to the company’s capital structure, and changes to the articles of association. However, it is unusual for the acceptance threshold to be set as low as 50%. Offerors typically set a higher threshold but retain the option to waive this condition later. Therefore, if the initial acceptance level is not met, they can still proceed with the offer, provided they have secured control by exceeding the 50% threshold. In such cases, the bid becomes uncondi - tional and binding. 6.6 Requirement to Obtain Financing Private M&A Transactions Conditions on financing being obtained occur, although they are not very common. This is mainly due to commercial reasons as the seller would typi - cally require the acquirer to secure financing ahead of entering into the share purchase agreement by not accepting such condition precedent. Public M&A Transactions In a takeover situation, an offer may only be submit - ted after preparations proving that the offeror has the financial capacity to carry out the offer. For a full or partial cash offer, the offeror must have sufficient financial resources to cover the entire consideration offered in cash. If an acquisition loan is required and its payment conditions are not listed as conditions for the completion of the offer (even if the room for such completion condition is limited), these condi - tions must be ones that the offeror can practically ensure being fulfilled. The full offer amount, assum - ing full acceptance, must be available for immediate drawdown under these conditions when the offer is made public.
to agree on such provisions. Public M&A Transactions
Under Swedish law, deal security measures such as break-up fees, match rights, force-the-vote provisions and non-solicitation clauses are strictly limited and generally not allowed without specific approval. The takeover rules require the target company’s board to act in the best interests of all shareholders and to avoid measures that could unfairly favour one offeror over another or restrict shareholder choice. As a general rule, the board of directors of the target company is not allowed to enter into any offer-related agreements with the offeror. Consequently, break-up fees are not allowed. However, under certain circum - stances, the Securities Council may grant exemptions and allow a protective measure. It should be noted that the bidder often secures the support of key share - holders before making the offer (see 6.11 Irrevocable Commitments ). 6.8 Additional Governance Rights Private M&A Transactions Shareholders in private M&A transactions may enter into a shareholders’ agreement that allows the parties to agree on additional provisions on corporate gov - ernance and their internal relationship as sharehold - ers. Such provisions may include the right to appoint board members or veto certain proposals/resolutions at the general meeting or board meetings. However, under Swedish law, shareholders’ agreements are generally not binding on the company, and any breach of the agreement must therefore be resolved between the shareholders. Public M&A Transactions As mentioned previously, a theoretical key control threshold is over 50%, which gives a shareholder vari - ous rights, such as the right to appoint the board of directors. Another key control threshold is two-thirds ownership, which enables a shareholder to pass important company resolutions (see 6.5 Minimum Acceptance Conditions ). However, a shareholder can effectively control the company even with a lower
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