SWEDEN Law and Practice Contributed by: Corinne Ekman, Mikael Nagy and Joacim Kanstedt, Gernandt & Danielsson Advokatbyrå KB
companies which may otherwise be difficult to subscribe for via typical fundraising rounds. This enables both investors and employees to liquidate their positions prior to the shares being publicly traded and is also used to clean up the cap table pre-IPO. Firms like Klarna, Northvolt, and Spotify (pre-IPO) have all seen structured secondary transactions. Today, it is quite com - mon for growth-stage Swedish companies (par - ticularly in fintech, deep tech or SaaS) to facili - tate these deals. In Sweden, the offering of equity securities by a private, non-listed company, is not subject to any specific securities regulations under Swed - ish law. However, private limited liability com - panies ( privata aktiebolag ) are subject to restric - tions on how they can market and distribute their shares. In particular, they are not permitted to make public offerings and cannot extend an offer to more than 200 individuals. In the event that a company intends to raise capital to a wid - er range of public investors, the company must, prior to doing so, be converted into a public lim - ited liability company ( publikt aktiebolag ) which – while distinct from being listed on a regulated market or a multilateral trading facility – allows for a broader issuance of shares. 7. Regulation 7.1 Securities Offerings The EU Prospectus Regulation (Regulation (EU) 2017/1129) applies to public limited liability companies, which sets out the conditions under which a prospectus must be prepared. In gener - al, if an offering is directed to the general public (being defined as more than 149 individuals), a prospectus may be required, unless an exemp - tion applies.
In venture capital transactions, these provisions become particularly relevant in larger financing rounds or in cases where numerous employees or other stakeholders hold equity instruments. Companies planning for expansion or broad- based equity offerings must carefully consider these legal requirements to ensure compliance and avoid unintended regulatory consequences. 7.2 Restrictions While banking-related regulations may apply when investing in fintech and other companies under supervision by the Swedish Financial Supervisory Authority (eg, in relation to own - ership assessment), Sweden has traditionally maintained an open investment environment with no general restrictions on FDI in Swedish companies. However, in December 2023, Swe - den implemented the Foreign Direct Investment Act (the “FDI Act” ) with an overarching goal to preserve and protect Swedish interests. The implementation of the FDI Act has signifi - cantly altered the regulatory landscape for not only foreign investors, but national investors as well, as the FDI Act dictates that all transactions (including intra-group reorganisations) which are within the scope of the act must be noti - fied to the regulators. The FDI Act establishes a mandatory screening mechanism for certain foreign investments, particularly those involving businesses engaged in activities deemed criti - cal to national security, public order or essen - tial societal functions. The scope of the act is broad and covers investments in sectors such as defence, energy, telecommunications and other strategically important industries. Depending on the nature of the target company’s operations, foreign and national venture capital investors may be subject to notification requirements and regulatory review, which could delay or, in rare cases, restrict an investment.
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