Limited Liability Company and Branch
Incorporation
A limited liability company can be started by one or more natural persons or legal entities and a share capital of at least SEK 25 000 is needed to start a limited company. A bank certificate is needed to confirm that the share capital is credited on the bank account of the company to be incorporated.
A limited company must be registered with the Swedish Company Registration Office (“SCRO”- Bolagsverket). The SCRO will send a registration certificate after the company is registered. Registration provides nationwide protection of the company name.
The registration process normally takes up to two weeks with the SCRO. The SCRO website provides more detailed information on the current processing times for registering a limited company.
Members of the Board
Swedish Company Law defines the requirements for the number and nationality of directors in a private limited liability company. A private limited company can have a board of directors consisting of only one or two board members. If the company has less than three directors, a deputy director needs to be appointed. If the board consists of two or more board members the shareholders must appoint one of the board members as chair of the board. A private limited company does not have to appoint a managing director. At least 50% of the number of directors and of the number of deputy directors needs to be resident within EEA. If none of the directors is resident in Sweden, a process agent needs to be appointed.
Auditor
A limited company is required to have an auditor if the company fulfils two out of below three requirements for the last two financial years.
- More than 3 employees
- More than 1.5 MSEK balance sheet total
- More than 3 MSEK turnover
Beneficial owner
All limited companies must inform the SCRO of the identity of the beneficial owners and need to register the beneficial owners. A beneficial owner is/are the person(s) who own or control the limited company.
Branch
A foreign company wishing to operate in Sweden without registering a limited liability company may open a branch. A branch is a foreign company’s local office in Sweden with its own administration and corporate identity number. A branch is part of a foreign-based company and is not a legal entity. A branch needs to be registered with the Swedish Company Register, receives a Swedish Company Registration number and is subject to Swedish law but it is not a legal entity.
Both the branch and the foreign-based company connected need to fulfil some requirements such as for example:
- The branch must keep its own accounting records, kept separate from the foreign-based company.
- Every year the branch must file an annual report for the foreign-based company and in some cases for the branch as well.
- Taxes and other charges must be paid as required.
- The foreign-based company must follow the rules that apply in Sweden.
A foreign company may only have one branch in Sweden and the foreign-based company shall appoint a managing director to run the business activities in Sweden. The managing director represents the branch.
A branch has no independent capital and its assets and liabilities are a part of the total assets of the foreign-based company. A branch is to keep its own accounting records, and these are to be kept separate from the foreign-based company. The accounts of a branch and the administration of the managing director are, when required, subject to examination by an authorized or approved public accountant.