SWEDEN Law and Practice Contributed by: Louise Rodebjer, Ólafur Steindórsson, Per Dalemo and Johannes Wårdman, CMS Wistrand
8.4 Independent Outside Advice Typically, any transaction – whether private or public – requires external legal advice, and it is common to involve financial advisers. In relation to certain cases where a public offer has been presented, the directors in the target are required to conduct a formal evalua - tion of the offer, a process that often involves engag - ing external specialists to issue a fairness opinion on the offer value in relation to the company. 8.5 Conflicts of Interest The principles of conflict of interest between the board of directors, managing directors or shareholders and the company are well established and regulated under the Companies Act. Member of the Board of Directors or Managing Director According to the Swedish Companies Act, no member of the board of directors or managing director may participate in decisions concerning: • an agreement between the company and the mem - ber themselves; • an agreement between the company and a third party in which the member has a material interest that may conflict with the company’s interests; or • an agreement between the company and a legal entity that the member is authorised to represent, either alone or together with another person. Shareholders Additionally, under the Swedish Companies Act, a shareholder may not vote, either in person or through a proxy, on the following matters: (i) legal proceedings against themselves; (ii) their discharge from liability for damages or other obligations to the company; or (iii) legal proceedings or discharge as referred to in (i) and (ii) involving another person in which the shareholder has a material interest that may con - flict with the company’s interests. Advisers Before accepting an engagement, the company’s advisers normally ensure that potential conflicts of interest are assessed. In addition, lawyers in Swe -
den must comply with the Swedish Bar Association’s Code of Conduct, which stipulates that a lawyer may not take on assignments where there is a conflict of interest. For example, a lawyer may not represent a client if the lawyer currently represents, or has pre - viously represented, the opposing party in the mat - ter. It is important to emphasise that the assessment of conflicts of interest applies to the whole law firm, meaning that no member of such firm is allowed to be in a position of conflict. Hostile takeover offers are both authorised and com - mon in Sweden. Nevertheless, hostile offers are less common than non-hostile offers. This is mainly due to the Swedish corporate culture, which emphasises co-operation between management and sharehold - ers. Furthermore, there are strong legal protections for shareholders, such as the principle of equal treatment, which complicates hostile acquisitions and ensures that all shareholders are treated fairly. 9.2 Directors’ Use of Defensive Measures 9. Defensive Measures 9.1 Hostile Tender Offers As a general rule, the Act on Public Takeovers prohibits defensive measures in the event of a public takeover offer. If the board of directors or the managing director of a company has reason to believe that such an offer is imminent or has already been made, the company may not take any action that could prevent or hinder the implementation of the offer, unless authorised by the general meeting. However, the board of directors may, without the approval of the general meeting or an exemption from the Swedish Securities Council, seek alternative offerors (known as white knights). 9.3 Common Defensive Measures The most common reactive measure against a hostile offer is for management to seek alternative offerors and initiate a structured auction process to maxim - ise price competition. Additionally, companies may include precautionary measures in their articles of association that address decision-making processes, board elections, share classes and corporate govern - ance controls to protect against unwanted takeovers.
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