Recent Economic Cycles

The current economic climate has affected the loan market with the Swedish economy currently in a recession. There are some positive indications and an economic recovery is expected towards the end of 2024, with further improvements in 2025 and 2026. The Central Bank of Sweden, the Riksbank, has – like many other central banks ‒ unveiled its biggest interest rate hikes in decades to combat rising inflation, which has resulted in a contraction of M&A activity, with private equity sponsors holding on to assets for a longer period while waiting for better macroeconomic conditions. This has obviously resulted in a less active leveraged finance market. The Ukraine war and the situation in the Middle East also risks additional volatility.

Given the interest rate hikes, some borrowers have struggled to meet their financial covenants, which has resulted in workouts and informal restructurings or – in less dramatic cases – a substantial amount of waivers. While the number of bankruptcies has increased markedly, there have been few high-profile formal bankruptcies.

Limited access to funding from traditional banks has led borrowers to seek alternative financing sources, such as private credit funds. This trend is expected to increase.

Regulatory Environment

As regards the regulatory environment in Sweden, there have been no significant changes in the legislation regarding credit institutions. Perhaps worth noting is that the Digital Operational Resilience Act (DORA) will apply as of 17 January 2025.

The consumer credit market is currently subject to less stringent regulation than banks and other credit institutions and has been identified by the Swedish government and regulatory authorities as a main driver behind over-indebtedness, particularly among young people. Therefore, the Swedish government has increasingly taken aim at the approximately 70 consumer credit institutions and has now presented a set of legislative proposals with the explicit aim of:

• subjecting these entities to the same regulatory framework as banks and other credit institutions;
• restricting the terms for consumer loans; and
• make any unsecured loans (including consumer loans) less beneficial from a borrower’s tax perspective.

Surging energy prices, the war in Ukraine, the situation in the Middle East and the tense geopolitical situation in Taiwan all contribute to the uncertain economic outlook and, by extension, the loan market in Sweden. This has led to a situation where commodity prices have at times risen to very high levels and, as a result, banks and other lenders have taken a more conservative approach towards borrowers that are affected by such price fluctuations. In general, high-risk projects tend to have difficulty raising loan financing, as banks look for stable companies with consistent and predictable earnings.

After many years of covenant-light loan financings with low interest rates and borrower-friendly terms and conditions, lenders now apply stricter covenants and higher pricing of loans while providing lower leverage than in previous years.

As the Swedish economy has been pushed into recession, the high-yield market has cooled down as a result of banks and other lenders taking a more careful approach. Real estate remains the largest sector in the Swedish market but its relative share of total outstanding volume has reduced, given that the real estate market has been significantly slower as real estate companies have struggled to adapt to higher interest rates. Owing to uncertainties on the financial markets since the Ukraine war, debt quantum tends to be smaller.

As traditional banks become more risk-averse, Sweden has seen an influx of alternative credit providers ‒ primarily credit funds. The Swedish market includes local debt funds and foreign debt funds alike. Alternative credit providers may offer borrowers more flexible terms and conditions than the traditional loan market and may include warrants and other equity-like features, as well as payment-in-kind (PIK) mechanisms.

The loans provided by alternative lenders on the Swedish market continue to increase and there has been an increase in the use of HoldCo structures, generally with a PIK element and structural subordination to any senior loans. Credit funds, direct lenders and peer-to-peer lenders offer alternative financing (particularly for SMEs), with a very active fintech sector that has grown significantly for some years – providing more flexible financing.

The sustainability trend in the Swedish loan market is increasing as a result of new regulation and high customer demand, resulting in more corporate borrowers entering into sustainability-linked loans with traditional banks. Several green bonds have been issued in the past few years, with the real estate sector being the main driver.

In addition, onshore wind power projects have continued their growth, despite more volatile world economics.

Providing loans to Swedish companies is not itself subject to a licence, provided that the funds are not raised by accepting repayable funds from the public. However, providing a loan may fall within the scope of the Swedish Currency Exchange and Other Financial Activities Act, provided that such services are provided on a professional basis and are deemed to be the main activity of the operations of that entity. If so, the provision of such loan will require a registration with the Swedish Financial Supervisory Authority (SFSA).

Although a significant amount of Swedish banking regulation is derived from EU directives and regulations, the primary domestic legislation governing the banking sector in Sweden is the Banking and Financing Business Act. Banking business and financing business are heavily regulated in Sweden.

Banking business includes:

• processing payments via general payment systems; and
• receiving funds that are repayable to the creditor within 30 days of notice.

Generally, financing business includes:

• accepting repayable funds from the public; and
• granting loans, providing guaranties or conducting receivables purchasing or leasing.

There are only a few alternatives for entities to provide financing to a Swedish company, provided that such services are deemed to fall within the scope of licensable activity.

Foreign credit institutions holding a licence in another European Economic Area (EEA) country may submit a passporting notification to the competent authority in their home member state, requesting permission to provide their regulated banking services to another EEA country (including Sweden). The competent authority will review the notification and notify the SFSA that the entity in question will provide services in Sweden. Such entity will thereafter be permitted to provide its regulated banking services on a cross-border basis into Sweden from its home member state.

Foreign credit institutions holding a licence in another EEA country may, instead of providing their banking services on a cross-border basis, submit a notification to the competent authority in their home member state that they shall establish a branch or representation office in Sweden. Such notification must include a business plan, among other things.

Non-Authorised Entities and Third-Country Credit Institutions

Entities not holding a banking licence in another EEA country need to apply for a licence with the SFSA in order to conduct banking or financing business in Sweden. The details of the application requirements will be different depending on the relevant licence and the extent of such licence.

However, the following items are typically included:

• detailed business plan, etc;
• policies regarding credits, internal governance, risk management, etc;
• financial projections for the next three years;
• ownership and owner executive assessments; and
• management assessments.

Credit institutions based outside the EEA may establish a branch in Sweden.

Foreign lenders are generally not restricted from providing loans to Swedish companies but may require a licence from the SFSA.

Foreign lenders are not restricted or impeded from receiving security or guaranties. Please note that the enforcement of share security involving a change in shareholding may become subject to the Swedish Foreign Direct Investment Act and could therefore in theory be prohibited (see further below under 8.4 Foreign Ownership).

Foreign currency exchange controls are not imposed in Sweden.

In general, there are some legal restrictions that relate to financial assistance, corporate benefit, AML regulations and sanctions, as further expanded on in 5.3 Downstream, Upstream and Cross-Stream Guaranties and 5.4 Restrictions on the Target. A loan agreement will often contain Loan Market Association (LMA)-style restrictions on the use of proceeds.

Agents

The appointment of a security agent acting on behalf of the secured parties, with regard to the security, is customary practice in the Swedish market.

Trusts

The concept of trusts is not recognised in Sweden. Consequently, there are no provisions under Swedish law that deal specifically with the function of a trustee.

Lenders may transfer debt, together with the existing security package, to a third party. Strong borrowers – most commonly investment-grade companies or borrowers backed by private equity sponsors – will successfully restrict the transfer of debt to a certain group of lenders on a pre-approved “white list”.

Swedish law does not recognise the concept of novation, so transfer of debt is made by an assignment of rights, benefits and obligations. The relevant security package should be transferred in connection with the transfer of the loan, given that Swedish law requires an existing or future debt in order for the security to be valid. Due perfection of the security package should be taken into consideration in connection with a transfer of the loan and the security package to a new lender.

Swedish law does not restrict debt buybacks. However, most Swedish law-governed facilities agreements will contain LMA boiler-plate restrictions in relation to debt buyback. Debt buybacks are not common in the Swedish loan market.

Swedish takeover rules apply to all takeover bids for listed companies traded on Nasdaq and stipulate the fundamental principle that a bidder may only announce a cash offer after making sure that the offer can be fully paid and after taking all reasonable measures to ensure that payments by any other means are performed. The bidder must furthermore ensure that adequate financing is available for the entire term of the offer. A press release containing the details of the financing arrangements must be released as soon as possible.

The bidder may subject its bid to a condition to be met for the bidder to go through with the transaction. Such condition must be drafted so that it can be objectively decided if it has been met or not. Thus, the condition may not be worded so that the bidder has the discretion to decide or influence whether or not the condition can or will be met. An example of a permitted condition is that the bidder receives bank funding. The bidder may, however, only withdraw the offer if the satisfaction of such financing condition is deemed to be of vital importance for the acquisition. The Swedish Securities Counsel has final authority as to whether or not the conditions are compliant with accepted market practices.       

The unwinding of LIBOR as a reference rate has naturally required changes across the full suite of existing loan transactions under Swedish law, where the LMA-based wording regarding the Secured Overnight Financing Rate and other risk-free rates has become the market standard.

Usury is considered a criminal offence in Sweden. However, in commercial transactions with no consumer aspects, there are no clear limits on what interest rates would be considered usury. Such limits are therefore determined on a case-by-case basis.

It may also be noted that an interest rate provision can be modified or set aside if considered to be unfair or unreasonable pursuant to the Swedish Contracts Act. However, the threshold for a contractual provision to be considered unfair or unreasonable in a commercial relationship is likely very high.

Further, there is an interest rate cap – calculated as the reference rate plus 30% ‒ in respect of certain high-cost credits provided to consumers pursuant to the Swedish Consumer Credit Act (which is set to be lowered to 20% during 2025). Such high-cost credits (excluding certain credit purchases and housing loans) relate to unsecured loans provided to consumers.

There is no specific Swedish regulation regarding disclosure of certain financial contracts. For companies with financial instruments admitted to trading on the regulated markets in Sweden, financial contracts must be publicly disclosed if they constitute inside information pursuant to the EU Market Abuse Regulation.

Sweden does not levy withholding tax on payments of principal or interest to foreign lenders, provided that such lenders are not organised under Swedish law and do not conduct business from a Swedish permanent establishment.

Other Taxes or Tax Considerations

There are no other specific major restrictions or significant costs associated with granting security or providing guaranties under Swedish law. However, stamp duty is payable in connection with the issuance of new business mortgage certificates and property mortgage certificates. Such stamp duty is a one-time cost and such certificates may, after issuance, be reused without additional stamp duty to be paid.

The stamp duty for the issuance of a new business mortgage certificate amounts to 1% of the face value of the business mortgage certificate, whereas the stamp duty for the issuance of a new property mortgage certificate amounts to 2% of the face value of the business mortgage certificate.

Security over ships and aircraft are also subject to stamp duty.

Fees

Minor administrative fees will be payable in connection with issuing new business mortgage certificates or property mortgage certificates.

There is generally little concern for any foreign lender that is not organised under Swedish law and does not conduct business from a Swedish permanent establishment, as such lenders are generally not subject to Swedish income. However, lenders based in Sweden may be subject to taxation in respect of income that derives from certain capital assets, such as interest. Foreign lenders, including non-money centre bank lenders, should therefore carefully consider their operations and potential permanent establishment in Sweden.

Under Swedish law, security can be created over most types of assets. However, it is difficult to create fixed security over specified movable assets used in the day-to-day business of the relevant company. The underlying reason is that for any security to be validly created under Swedish law, the security provider must be effectively deprived of its rights to dispose or deal with the assets that are the subject of the security. If that is not the case, the pledge has not been validly created/perfected.

The most common types of assets available as collateral are shares, real property, bank accounts, receivables and business mortgages.

A binding agreement between the pledgor and the pledgee, along with fulfilment of any necessary perfection requirements, is required under Swedish law in order to create a security interest.

Due perfection steps of the most common security assets are as follows.

Shares

Taking security over the shares in a Swedish limited liability company is very straightforward under Swedish law. Share pledges are perfected by way of delivery of share certificates representing the shares in the relevant company to the secured creditor or its agent (or, in the case of book-entry securities, notification to the securities depository or the relevant custodian bank with which the shares are deposited). The delivery of the share certificates should ideally take place within Sweden or else the perfection step may be questioned. It is recommended that the share certificate is endorsed in blank and the pledge should be registered in the share register of the company.

Business Mortgage

A business mortgage is a specific lien that makes it possible for companies to use their operating assets (chattels) as security for credit. A business mortgage is not tied to a certain specific property at a given time. Instead, the underlying property might change over time. The security is perfected through delivery of a business mortgage certificate from the pledgor to the pledgee. This certificate represents a certain value in the pledgor’s chattels and serves as security for the debt. The certificate can either be issued in written form or electronically by registration in the business mortgage register kept by the Swedish Companies Registration Office.

Bank Accounts

A bank account pledge is perfected through a notification to the bank. It should, however, be noted that the debtor should not have any disposal whatsoever of a bank account that is pledged in order for the pledge to be effective against other creditors. For this reason, the standard approach in Sweden is to take security over deposit accounts rather than accounts used for day-to day operations. To the extent that operating accounts are pledged, it is common to use delayed perfection arrangements – meaning that disposal rights over the pledged account are triggered by certain credit events.

Receivables

The pledging of receivables is perfected by a notification to the original debtor stating that all payments under the receivables shall be paid to the secured party. As payment must be made to the secured party, this is not always practical as far as it relates to accounts receivables (but less of an issue as far as it relates to intercompany receivables). It is therefore quite common with delayed perfection mechanisms where the redirection of payments is only made following certain trigger events.

Real Estate

The security is perfected through delivery of the mortgage certificate from the pledgor to the pledgee. This certificate represents a certain value in the real estate and serves as security for the debt. A mortgage certificate can either be issued in physical form or electronically by registration in the floating charge register kept by the Swedish Land Registry.

A business mortgage is a specific lien that makes it possible for companies to use their operating assets (chattels) as security for credit. A business mortgage is not tied to a certain specific property at a given time. Due to the difficulties in taking security over a company’s goods, equipment or inventory as set out in 5.1 Assets and Forms of Security, security over these assets can be created by way of business mortgage. However, a business mortgage does not attach to cash at hand, bank deposits, shares or other financial instruments, property that can be charged in another way (eg, ships and aircraft), or property that can neither be the object of levy or execution nor be included in a bankruptcy.

In theory, it is possible to create security over different assets under one common security agreement. However, this is uncommon in the Swedish market, as the specific perfection requirements for each type of asset should then be included.

A Swedish company may guarantee the obligations of another group company, provided that the parent company of the group is domiciled within the EEA ‒ subject to the financial assistance and corporate benefit limitations outlined here and in 5.4 Restrictions on the Target.

A Swedish limited liability company may not provide security or guaranties for the obligations of any of its direct or indirect shareholders (or any person that is under the control of such direct or indirect shareholder) that is a member of the same group of companies as the company that has provided the guaranty or security, if the parent of such group is domiciled outside the EEA. The Swedish Tax Authority may grant exemptions from these prohibitions, but exemptions may be granted only where very specific circumstances exist. (Exemptions have, for example, been granted where part of the secured debt is made available for the purpose of providing downstream loans to the Swedish company.)

Further, Swedish limited liability companies can only provide upstream and cross-stream security and guaranties subject to limitations regarding corporate benefit or value transfers. A value transfer is described in the Swedish Companies Act as “any business event as a consequence of which the company’s assets are reduced and which is not of a purely commercial nature for the company”. If there is no corporate benefit, the security/guaranty would be treated as a distribution of assets and is unlawful unless there are distributable reserves available. Hence, a Swedish company can not incur obligations under a guaranty or security in excess of the corporate benefit interest it is receiving and the aggregate amount of its distributable reserves. ‘

Granting guaranties and security for wholly owned subsidiaries is typically considered to be commercially justified and therefore not subject to the above-mentioned value transfer restrictions unless certain circumstances are at hand.

The above-mentioned limitations (and the financial assistance limitations further described in 5.4 Restrictions on the Target) are usually addressed in the relevant documentation by standard limitation wording. Such limitation language should on its face limit the obligations of the Swedish limited liability company under the guaranty/security and also limit any liability that otherwise could be directed towards the directors or representatives of the company.

A Swedish company may not provide financial assistance (by way of loans, security or other credit support) for the purpose of the acquisition of shares in itself or in any parent company.

There are no whitewash procedures under Swedish law. In order to decide whether the provisions on financial assistance apply, a momentarily test is done at the time of the closing of the acquisition.

It is possible for the target company to provide security some time after the acquisition. There is no clear guidance on what may constitute a reasonable time period that should lapse before security is granted, but generally the market standard is somewhere between 30 and 90 days after completion of the acquisition.

Violations of the Swedish financial assistance regulations may lead to criminal sanctions and result in personal liability for the directors of the target and adverse tax consequences for the beneficiary. Given the uncertainties and the consequences of non-compliance with these rules, it is not unusual to include limitation wording that refers to the financial assistance restrictions also with regard to security and guaranties that are granted after completion of the acquisition.

There are no other major general restrictions, consents required to approve, or significant costs associated with granting security or guarantees under Swedish law. (However, please note 4.2 Other Taxes, Duties, Charges or Tax Considerations as regards stamp duty to the extent relevant.)

Release mechanisms are normally governed by the relevant security agreement in addition to a general release clause typically included in an intercreditor agreement or the credit agreement. Intercreditor agreements governing the release of assets pledged under Swedish law will most often include the security agent’s discretionary power to release the security, as any provisions stating that security shall automatically be released may impair the security interest. Typically, security over the most common security assets are released as per the following.

• Release clauses in relation to security over receivables require notification to the relevant debtor (if a notice of security has been sent to  such debtor).
• Release clauses in relation to security assets that have been perfected by way of delivery to the pledgee usually require that the pledgee returns the relevant asset to the pledgor. This applies to, for instance, non-electronic business mortgage certificates, non-electronic property mortgage certificates and share certificates.
• Release clauses in relation to security that has been registered in a certain register usually require a deregistration of such security interest to be made in the relevant register – for example, electronic business mortgage certificates, electronic property mortgage certificates, and securities registered with a securities depositary.

The general principle under Swedish law is that competing claims have equal right to payment. However, there are certain exceptions that give some creditors a right to payment before other creditors. The order in which creditors’ claims in Swedish insolvent liquidation proceedings or execution of debt procedures are paid is determined by the Swedish Right of Priority Act and the Swedish Enforcement Code.

A right of priority to payment may be specific or general where claims with a specific right of priority include any claims secured by pledges – whereas claims with a general right of priority are, for example, costs associated with the bankruptcy estate and the initiation of liquidation proceedings. This means that secured creditors will generally have priority over any unsecured claims.

Parties involved in a Swedish loan financing will deal with any competing security interests by way of entering into a subordination agreement or an intercreditor agreement in which the contractual priority between different lenders or group of lenders may be created. Such agreements are generally based on LMA standards. It remains uncertain under Swedish law whether an intercreditor agreement is effective against an administrator in bankruptcy. Owing to this uncertainty, it remains unclear whether a bankruptcy administrator would abide by the intercreditor agreement ‒ meaning that a lender may need to rely solely on the turnover provisions in the intercreditor agreement/subordination agreement.

There are a limited number of security interests arising by operation of law that will prime a lender’s security interest. It is generally not possible to structure around such security interests, apart from trying to mitigate these by way of indemnity clauses.

A retention of title of certain goods and assets can result in a seller of such goods or assets having greater priority than a secured lender. A valid retention of title must, among other things, be created prior to the relevant goods or assets being transferred.

Certain movable property remaining in the possession of the seller may have priority over other creditors if the sale has been duly registered with the Swedish Enforcement Authority. Finally, maritime liens will also prime a mortgage over a vessel.

In general, movable assets such as shares, receivables and bank accounts may effectively be realised both in the case of bankruptcy and outside bankruptcy at execution of a debt. Swedish security documents normally provide that the secured creditor may realise the pledged assets by private sale or public auction or in such manner and on such terms as is deemed fit. Further, a security may only be enforced to the extent it is covered by the debt secured by the security, and any excess cash from an enforcement sale should be paid to the pledgor.

Note that a secured creditor has a general duty of care in connection with any realisation of a pledged asset. Typically, this means that the secured creditor shall use its reasonable endeavours to obtain the best purchase price possible under the prevailing circumstances (or, in any event, not to sell the assets at undervalue). It is worth noting that Swedish law restricts a secured party from assuming direct ownership of the pledged asset without conducting a proper and independent sales process.

Under Swedish law, a creditor whose claims are secured by a business mortgage is entitled to payment out of the assets covered by the mortgage only in connection with bankruptcy of the company or through seizure by the Swedish Enforcement Authority. A mortgage over real property cannot be enforced by the secured creditor itself but only by the Swedish Enforcement Authority or, in the case of bankruptcy, through a receiver.

If the pledgor were to commence bankruptcy proceedings, a bankruptcy administrator would be appointed by the court to realise the pledged assets and apply the proceeds in discharging creditors in the order set out in the Swedish Rights of Priority Act.

Swedish courts generally recognise the choice of foreign law to govern contracts, subject to such foreign law not being in violation of Swedish public policy. Foreign law contracts may be enforced in Sweden, provided that Sweden has jurisdiction. Waivers of immunity are generally legally binding and enforceable under Swedish law.

Foreign Court Judgments

Judgments given by a foreign court may be enforceable in Sweden under the Hague Convention, Brussels I Convention, or Lugano Convention covering all EU jurisdictions as well as the UK. US judgments are, in principle, not enforceable in Sweden. However, they may be regarded by the Swedish courts as evidence of the outcome of the dispute.

Arbitral Awards

Sweden is a party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (the “New York Convention”). All arbitral awards issued by a connected party under the New York Convention are enforceable in Sweden.

There are no general restrictions in relation to a foreign lender’s ability to enforce its rights under a loan agreement or a security agreement, provided that the Swedish court or tribunal is deemed to have jurisdiction.

Following a bankruptcy order, the assets of the Swedish entity will be managed by a receiver and independent enforcement is not possible. However, a creditor with a valid pledge that includes possession of the security asset may sell the security asset at a public auction.

Further, certain hardening periods in relation to security apply. Security granted for prior debt or where perfection does not occur in a timely manner may be set aside if an application for the pledgor’s bankruptcy is filed within three months from the perfection of the security. A transaction by which one creditor has been favoured in preference to others in an unfair manner may also be set aside.

As a general rule, unsecured creditors will rank below any secured creditors. In addition, unsecured creditors will also rank below any creditors holding the following specific or general priority rights:

• special priority rights;
• general priority rights;
• unprioritised/unsecured claims; and
• subordinated claims.

Specific priority rights are rights related to certain assets and take priority over the general priority rights. The general priority rights are rights to the combined assets of the debtor, including the surplus of assets encumbered by specific priority rights. General priority rights can only be invoked in a debtor’s bankruptcy and include costs connected to the bankruptcy, whereas specific priority rights can be invoked outside bankruptcy.

Sophisticated parties will enter into a subordination agreement or an LMA-based intercreditor agreement governing the order in which creditors are to be paid.

The insolvency process itself can vary in length from a few weeks to many years, depending on the complexity of the case. A receiver is legally obligated to ensure that all creditors all treated fairly and that the maximum recovery is achieved.

The updated Swedish Reorganisation Act significantly alters the measures available for company restructurings.

Companies facing temporary financial difficulties can apply for restructurings to improve their financial situation, preventing enforcement actions by creditors during the process. Typically, this involves negotiating with creditors to reduce the company’s debts. The intention is for the Swedish courts to take a stricter approach in determining whether restructurings are appropriate (known as the “viability test”), with the aim of reducing the number of restructurings, but to increase the number of successful company restructurings.

A legally binding restructuring plan must be established, detailing the involved parties, actions to be taken, and timelines. Debt-to-equity swaps can also be included in the plan. Additionally, cross-group cram-downs now affect not only unsecured creditors but also secured creditors.

These changes aim to provide a more robust framework for companies seeking to reorganise and stabilise their finances.

Outside the court-mandated restructurings, informal processes are also common and often include tailor-made solutions that take into account the specifics of the relevant case.

Lenders should be careful when obtaining additional security once a borrower experiences financial difficulties, given that there are claw-back periods that may apply to any security granted shortly before a bankruptcy.

Lenders should aim to obtain security and become a secured creditor, as there is often a good chance of recovery for a secured creditor if the value of the assets has been maintained and if the costs incurred in connection with realising the security asset are manageable. Unsecured creditors are paid out after all other creditors – meaning that the chances of recovery are low.

Most project finance activity in Sweden relates to the transition to renewable energy, with wind power parks being built and financed as well as non-recourse project financing to enable the expansion of renewable energy sources and build factories in the north of Sweden. These project financings are often complex and generally attract interest from foreign lenders and investors as well as private and public entities.

PPP transactions are not very common in Sweden and there is limited legislation in this respect. Notable examples include the construction of Nya Karolinska, a hospital located in the north of Stockholm, and the construction of Arlanda Airport Express, a railway from the city centre of Stockholm to Arlanda Airport.

Project documents may be governed by foreign law, taking into account specific Swedish issues (particularly with regard to security). In larger project financings, the main financing documentation will most often not be governed by Swedish law.

The Swedish Foreign Direct Investment Act imposes a notification requirement prior to foreign direct investments in Swedish companies involved in security-sensitive services, certain technology, equipment used in the military sector, raw materials, and similar. An investment of more than 10% of the total shares or votes will require a prior notification to and approval by Swedish authorities.

A significant factor in structuring a project financing is determining the legal form of the project company, taking into consideration liability and ‒ perhaps most importantly – the tax effects for the owners of the project company.

Also, for any project financings that involve the acquisition of a Swedish company, please refer to 5.4 Restrictions on the Target detailing Swedish financial assistance rules.

A stated in 8.1 Recent Project Finance Activity, the main part of the Swedish project finance activity relates to renewable energy projects and traditional bank financing remains the main source of such project financing in Sweden. For project financing within the real estate sector, bond financing is also common.

Larger project financing will include a mix of commercial banks, as well as being covered by government guaranties and sometimes direct funding.

Sweden is rich in natural resources – particularly in the northern part of Sweden, where several large-scale green industrial projects have been initiated. There are no general limitations on the export of these resources, apart from sanctions-related limitations. These operations may encounter issues with local municipalities and environmental permits.

Environmentally hazardous activities require an environmental permit in accordance with the Swedish Environmental Code. Therefore, certain projects may need environmental permits, which should be considered during project financing. Most applications for these permits are submitted to the local County Administrative Board. However, projects with a more significant environmental impact (eg, mining and industrial activities) must obtain permits from the relevant Land and Environment Court. This process typically involves consultation with other concerned parties, which often makes it time-consuming.

The Swedish Work Environment Act, supplemented by regulations from the Swedish Work Environment Authority, generally governs health and safety in the workplace.