SWEDEN Trends and Developments Contributed by: Björn Wendleby, Rico Benavides, Per Josephson and Stellan Koch, Harvest Advokatbyrå AB
Alignment of Swedish law with the changes to the AIFMD and the UCITS Directive In light of the recent amendments to the AIFMD and the UCITS Directive at the EU level, it will be necessary to review existing provisions and introduce new provisions in national legislation pertaining to inter alia liquidity management tools. As of 1 July 2023, the Swedish fund leg - islation incorporated provisions on the use of the liquidity tool known as “swing pricing”. The amendments to the AIFMD and the UCITS Direc - tive take the required liquidity tools one step fur - ther, introducing a range of liquidity tools that are to be implemented. The ongoing committee review is expected to propose the incorporation of the amendments, with no major deviations. Loan originating funds Furthermore, the AIFMD amendments introduce regulations governing loan originating funds. Swedish legislation currently lacks specific regulations governing such funds, including an investment strategy to provide credit loans – ie, procedures related to the assessment of credit risk, oversight of the credit portfolio and align - ment with associated liquidity risks in terms of redemptions. The committee will, among other things, review whether Sweden should exer - cise options in the amended AIFMD to impose stricter leverage limits than those specified in the Directive. The implementation of the amend - ments themselves, and any potential gold plat - ing, could have an impact on existing and new alternative investment funds originating loans as their investment strategy. Association-based funds with variable share capital The committee review is also tasked with review - ing a potential new framework for association- based funds with variable share capital, bench - marking the popular société d’investissement
à capital variable (SICAV; investment company with variable capital) structure from Luxem - bourg. Acknowledging the popularity and com - petitiveness of the SICAV and subsequent fund establishment in Luxembourg, the committee review is tasked with evaluating similar struc - tures for association-based funds with variable share capital, including in terms of potential tax considerations, increasing the Swedish fund market’s competitiveness. It should be noted that a Swedish framework for association-based funds with variable share capital has been under governmental review before, both in 2002 and as late as 2016. How - ever, prior attempts have not had the same over - arching mandate as that of the current commit - tee review, raising the hopes of those wanting to see SICAV-like structures in Sweden. The result of the committee review is expected in March 2025. However, in practice, fund man - agers should not expect the utilisation of such constructions any time soon, as after the com - mittee review is published, the ordinary legislate procedure – in the best-case scenario – will have to pass through preparatory stages and Parlia - ment. Contractual-based alternative investment funds In terms of alternative investment funds, Swed - ish special funds (formally alternative investment funds derived from the AIFMD, but which adhere to most of the requirements that undertaking for collective investment in transferable securities (UCITS) funds are subject to) are considered separate from other alternative investment funds in terms of liability. A special fund, like a UCITS fund, in Sweden cannot acquire rights or hold liabilities under the Swedish UCITS Act ( Svensk författningssamling (SFS) 2004:46) – instead, the fund company holds them in respect of the fund.
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