SWEDEN Law and Practice Contributed by: Corinne Ekman, Mikael Nagy and Joacim Kanstedt, Gernandt & Danielsson Advokatbyrå KB
and/or participation on their liquidation prefer - ence. • Reserved matters/veto rights: Investors typi - cally negotiate “reserved matters” catalogue, which reinforces investor protections. Such provisions typically restrict the issuance of securities that rank senior to those held by the investors and/or alter the rights of already issued securities. • Anti-dilution rights: These are becoming more common in Swedish venture capital investments and typically they are in the form of a weighted average ratchet. Full ratchet anti-dilution provisions are uncommon in the Swedish market. 3.6 Corporate Governance In Sweden, a VC investor would typically exer - cise its influence through its voting rights as a shareholder in the company and is typically able to secure the following rights to influence over management/the affairs of the venture in a shareholders’ agreement. • Board representation: The lead and other larger investors often get the right to appoint one or more representatives to the com - pany’s board. In case they do not want to appoint a board member – eg, in order to not be exposed to the fiduciary obligations that come with being a board member, the lead and other larger investors instead get the right to appoint a board observer without voting rights. • Reserved matters/veto rights: Investors are typically granted influence over certain significant decisions through “reserved mat- ters” catalogue. The nature of such influence – whether as veto rights for certain specific investors or as voting rights for a group of investors/shareholders – depends on the overall shareholding structure as well as the
relevant company’s negotiating position. The reserved matters typically include the follow - ing: (a) amendment of the articles of association; (b) decisions that would dilute the investors’ shareholding, such as changes to share capital and the issuance of securities; (c) approval of any dividend, distribution, or return of capital to shareholders; (d) changes in the company’s strategic direc - tion, certain operational resolutions such as budgets, business plan, raising loans and initiating litigation above a certain threshold; (e) consent to voluntary liquidation, dissolu - tion, winding-up, bankruptcy, reconstruc - tion or reorganisation of the company; and (f) related-party transactions. • Information and audit rights: investors typi - cally enjoy information and/or audit rights, which allow them to access certain informa - tion regarding the company’s operations and financials as well as oversee their invest - ments. In Sweden, the representations and warranties commonly observed in a financing round in a Swedish start-up or growth company are the following: • power and authority; • ownership of the issued shares; • corporate matters; 3.7 Contractual Protection Representations and Warranties
• financial information; • material agreements; • related-party transactions; • real property and other assets; • IPR and IT; • data privacy and GDPR;
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