SWEDEN Law and Practice Contributed by: Louise Rodebjer, Ólafur Steindórsson, Per Dalemo and Johannes Wårdman, CMS Wistrand
9.4 Directors’ Duties As mentioned previously, the board’s ability to enact defensive measures is highly limited, and generally requires the shareholders’ consent. However, any actions taken by the board must be in the best inter - ests of the company, which, in this context, reflects the collective interests of the shareholders. 9.5 Directors’ Ability to “Just Say No” Although the board may choose not to recommend the offer, it cannot prevent an offeror from making a public offer for the company’s shares, nor can it pre - vent a shareholder from accepting such an offer and ultimately acquiring the company, unless a consent clause is stipulated in the articles of association. As mentioned previously, in most cases disputes related to M&A are settled by arbitration. Statistics for 2024 from the Arbitration Institute at the Stock - holm Chamber of Commerce show that 57 disputes relating to M&A were registered, representing 28% of all disputes received by the Institute during the year, and making M&A the most common field of arbitra - tion in Sweden. Statistics for 2025 have not yet been published. 10.2 Stage of Deal Litigation in private M&A deals typically arises from warranty claims following closing of the transaction or in connection with calculation of earn-outs where the parties have differences of opinion on the earn-out to be paid – particularly disagreement on the underlying In 2020 and 2021 – a period characterised by high market valuations – the authors noted that transac - tions included earn-outs calculated on the basis of an estimate of the further development of the target companies’ then-record results. In some cases, such earn-outs were granted by buyers using a buy-and- build structure with a strategy to consolidate certain sectors of the Swedish market. However, as the mar - ket subsequently declined, sellers faced unexpected 10. Litigation 10.1 Frequency of Litigation earn-out calculation principles. 10.3 “Broken-Deal” Disputes
consequences when the earn-outs became unattain - able, or buyers experienced liquidity shortages pre - venting them from meeting their obligations under the earn-out agreements. Above all, this led to an increase in disputes over earn- outs and may have affected the willingness of sellers to agree to earn-outs in general, especially in relation to certain categories of buyers. This trend has since subsided, and there is no indication in market prac - tice that new categories of earn-out disputes have emerged. Shareholder activism in Sweden may include block - ing major public offers. A shareholder holding at least 10% of the shares can prevent an offeror from reach - ing the 90% threshold required to initiate a squeeze- out. Minority shareholders holding at least 10% also ben - efit from specific minority rights under the Companies Act, and certain corporate resolutions require a 90% majority; minority shareholders can influence corpo - rate decisions and governance, challenge manage - ment and protect their investment interests. 11. Activism 11.1 Shareholder Activism For example, shareholders holding at least one tenth of all shares may request the appointment of a minor - ity auditor and a special examiner, with the applica - tion submitted to the Swedish Companies Registra - tion Office, which also appoints the minority auditor and one or more special examiners. Furthermore, at the request of shareholders representing at least one tenth of the total number of shares, the general meet - ing shall decide on the distribution of half the profit for the year shown in the approved balance sheet after the deduction of certain items. The authors see examples of activist activity by (for example) privately owned Swedish investment com - panies that focus on building activist funds. Such companies acquire significant minority stakes in listed European companies and act as an active owner with the aim of creating long-term and sustainable value.
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