Capital Markets: Equity 2019 Comparisons

Last Updated June 10, 2019

Law and Practice

Authors



Advokatfirman Vinge KB was established through a merger between a number of leading Swedish firms in 1983 and is one of the largest firms in Scandinavia today, with some 300 lawyers in seven Swedish and overseas offices. Vinge is a full-service law firm, with a substantial international practice, which has acted in most of the major M&A in Sweden in recent years and has consistently achieved top positions on Mergermarket’s list of M&A advisers in the Nordic market as well as Tier 1 rankings with the leading ranking institutes. The firm regularly represents clients in connection with large international financing transactions, including project financing and structured finance arrangements. Vinge also advises domestic and international clients within a number of specialist areas, such as competition law and compliance, employment, IT, insolvency, insurance, IP, litigation and arbitration, marketing, private equity, property, public procurement, tax, telecommunications, and transport. In addition to four offices in Sweden, the firm has a presence in Brussels.

The largest exchange in Sweden is Nasdaq Stockholm, which is part of Nasdaq Group, Inc.

Nasdaq Stockholm operates two equity markets:

  • Main Market – this is the flagship market in the Nordic region and is intended principally for well-established companies. The Main Market is an EU-regulated market and, accordingly, its listing requirements are based on the applicable European standards (www.nasdaqomxnordic.com); and
  • First North – this is a multilateral trading facility (MTF) under EU legislation with lighter requirements and rules than those that apply to the Main Market. First North normally suits small, young or growth companies and is often the first step towards listing on the Main Market. (www.nasdaqomxnordic.com/firstnorth). First North also operates a premium segment, First North Premier, with similar listing requirements as the Main Market.

Alongside Nasdaq Stockholm, NGM Stock Exchange (NGM) is the only other exchange in Sweden. NGM is aimed primarily at small and medium-sized Nordic growth companies.

NGM operates two equity markets:

  • NGM Equity – this is an EU-regulated market (www.ngm.se); and
  • Nordic MTF – this is an MTF (www.nordicmtf.se).

In addition to the MTFs operated by Nasdaq Stockholm and NGM, Spotlight operates an MTF (www.spotlight.se).

See 1.1 Main Equity Markets or Exchanges, above.

Nasdaq Stockholm operates a number of indices (see www.nasdaqomxnordic.com/indexes).

The Swedish Financial Supervisory Authority (“SFSA”) is Sweden’s competent authority for the purposes of Directive 2004/39/EC on markets in financial instruments (“MiFID”) and operates in four main areas:

  • supervision;
  • regulation;
  • licences; and
  • applications.

One of the SFSA's key roles is to supervise and monitor companies operating in the Swedish financial markets. The SFSA is also authorised to issue regulations and guidelines relating to the Swedish financial markets. Companies offering financial services in Sweden require licences issued by the SFSA.

For a primary listing on the Main Market, the shares must be admitted to trading by Nasdaq Stockholm. In addition, the issuer must prepare a prospectus, which must be approved and registered by the Swedish Financial Supervisory Authority (SFSA) or other relevant authority.

Nasdaq Stockholm will only grant an issuer’s financial instruments admission to trading if the applicant fulfils the listing requirements. The same applies for NGM and Spotlight.

See 1.4 Regulatory Bodies Governing the Listing Process, above.

See 1.4 Regulatory Bodies Governing the Listing Process, above.

The EU Directives relating to admission to trading on a regulated market and public securities offerings have been implemented in the following Swedish legal acts:

  • the Securities Market Act; and
  • the Financial Instruments Trading Act.

In addition, equity offerings must comply with:

  • the Swedish Companies Act;
  • the SFSA Regulations (2007:17) governing operations on trading venues (Chapter 10); and
  • the rules of the relevant exchange, for example, the Rulebook for Issuers published by Nasdaq Stockholm or the Rules for NGM Equity, including rulings from the Swedish Securities Counsel regarding good practice on the stock market.

The following listing requirements apply to an issuer seeking admission to trading on Nasdaq Stockholm Main:

  • incorporation – the issuer must be duly incorporated or otherwise validly established under the laws of its jurisdiction;
  • validity – the issuer's shares must:
    1. conform to the laws of the company's jurisdiction; and
    2. have the necessary statutory or other consents;
  • negotiability – the shares must be freely negotiable;
  • entire class must be listed – the application for listing must cover all issued shares of the same class;
  • profitability and working capital – the issuer must demonstrate that it possesses documented earnings capacity on a business group level, or, alternatively, that it has sufficient working capital available for its planned business for at least 12 months after the first day of trading; the issuer must clearly disclose when it expects to be profitable and how it intends to finance its operations until such time;
  • liquidity – a prerequisite for trading is sufficient demand and supply for the admitted financial instruments; such sufficient demand and supply must support reliable price formation in trading. There are various components in the evaluation of these requirements before admission to trading. Factors that may be considered in the evaluation may include previous trading history; and
  • suitability – in cases where all listing requirements are fulfilled, the exchange can nevertheless refuse an application for listing if it considers that the listing would be detrimental to the securities market or investor interests.

In addition, there are specific requirements with respect to the composition of the management and the board of directors, as well as the issuer's capacity to provide information to the market.

See 2.2 Specific Eligibility Requirements for Issuers Undertaking a Primary Listing, above.

The expected aggregate market value of the shares at listing must be at least EUR1 million.

At least 25% of the shares within the same class being admitted to trading must be in free float (the stock exchange may accept a percentage lower than 25% if it is satisfied that the market will operate properly with a lower percentage in view of the large number of shares that are distributed to the public).

The issuer must have published annual accounts for at least three years in accordance with the accounting laws applicable to the company in its jurisdiction (including consolidated accounts for the group, where applicable). In addition, the issuer and its group's principal line(s) of business and field(s) of operation must be supported by a sufficient operating history.

As long as the issuer fulfils the listing requirements set out above, there is no minimum period of time for which an issuer must have been operating its current business prior to listing.

See 2.2 Specific Eligibility Requirements for Undertaking a Primary Listing, above.

For a main market listing, there are not any obligations owed by the underwriters or brokers to the regulators. For listing on the Nasdaq Stockholm First North, the issuer must have appointed a sponsor, a so-called 'certified adviser'.

See 2.2 Specific Eligibility Requirements for Undertaking a Primary Listing, above.

Subject to approval by Nasdaq Stockholm, an issuer with a primary listing on another exchange can apply for secondary listing in Stockholm. In general, the listing requirements are the same for primary and secondary listings, but the exchange can, under certain circumstances, waive one or more of the listing requirements applicable to main listings.

Issuers which have been admitted to trading on a regulated market, or equivalent, which is run by Nasdaq, Deutsche Börse, London Stock Exchange, NYSE, Euronext, Oslo Börs, Hong Kong Exchanges and Clearing, Australian Securities Exchange, Singapore Exchange, Borsa Istanbul or Toronto Stock Exchange, for a time period of normally more than 12 months, will, upon request, normally be granted a waiver from the requirement regarding review by a stock exchange auditor and legal due diligence. The exchange will, in such cases, normally require a certificate from the regulated market where the issuer is listed. This is done to verify that the issuer, in material respects, has complied with the listing requirements of that market.

The issuer must satisfy the exchange that there will be sufficient liquidity in the Swedish market to facilitate orderly trading and an efficient price formation process based on the requirements described above. The exchange will consider the forecast of liquidity based on an overall assessment of the share distribution of the company (that is, not only on the company's domestic market). If deemed appropriate, the exchange can require that the issuer uses a designated liquidity provider in order to safeguard a sufficient liquidity.

See 2.2 Specific Eligibility Requirements for Issuers Undertaking a Primary Listing, above.

The procedure for a primary listing does not differ for companies incorporated in foreign jurisdictions.

Foreign issuers may need to list depositary receipts unless settlement of a foreign issuer’s shares is possible in the trading system.

Apart from fulfilling the listing requirements referred to above in 2.2 Specific Eligibility Requirements for Issuers Undertaking a Primary Listing, above, there are no specific requirements regarding the structure of an IPO.

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In general, subsequent equity offerings in Sweden are structured as:

  • a rights issue with preferential right for existing shareholders; or
  • a private placement of new shares, also referred to as a directed issue of new shares.

According to good practice on the stock market, a listed company should primarily seek to raise new equity via a rights issue. However, a private placement of new shares may offer a more time-efficient process and may also enable the issuer to broaden the shareholder base: both reasons to deviate from the general principle rule to structure the capital-raising as a rights issue. In the case of a private placement, attention must be made to pricing to ensure that the subscription price does not violate the shareholders’ right of equal treatment.

These procedures do not differ in the event of a primary or secondary listing.

See 4.1 Structuring Subsequent Equity Offerings, above.

The issuer and the investment bank(s) usually engage external legal advisers in an equity offering.

Issuer's Counsel

Issuer's counsel assist with drafting the prospectus and negotiating the placing/underwriting documentation. The issuer’s counsel also assist with the preparatory work for the listing process, such as gap analysis of the listing requirements and with the specific legal due diligence required under the listing rules, and prepare the necessary corporate documentation.

Underwriters' Counsel

Underwriters' counsel carry out or otherwise advise on certain aspects of legal due diligence on behalf of the underwriters, assist in verifying the prospectus and negotiate the placing/underwriting.

In an IPO, while separate lawyers can be engaged by principal selling shareholder(s), it is common that the legal advisers engaged by the issuer also advise the selling shareholder(s). In addition, separate legal advisers may be engaged by the issuer's management, in particular as regards the unwinding of any management participation schemes if the IPO is PE-backed.

Investment banks are usually engaged for the following roles in an equity offering:

  • co-ordinator – rendering financial advice to the issuer on the offering in general, and co-ordinating the offering (as a global co-ordinator if the offering is launched in multiple markets);
  • underwriter – underwriting the shares issued in the offering; and
  • bookrunner – maintaining the book of demand for the offered shares.

Further, in an IPO, investment banks may be engaged to issue research reports and handle any stabilisation of the offering.

Other advisers include auditors, who participate in the offering/IPO process, particularly with respect to the comfort process around the prospectus.

Public relations consultants provide advice on dealing with shareholders, prospective shareholders and the media, particularly in an IPO process.

As is the case in all jurisdictions in which the Prospectus Directive and Prospectus Regulations apply, the overriding obligation of disclosure in a prospectus is to provide “all information regarding the issuer and the transferable securities that is necessary to enable an investor to make an informed assessment of the assets and liabilities, financial position, results, and future prospects of the issuer and of any guarantor, as well as of the transferable securities.” Furthermore, the information must be written in such a way that it is easy to understand and analyse.

The 'necessary information' must be prepared having regard to the particular nature of the transferable securities and their issuer. More detailed provisions regarding the information that must be included in a prospectus are set out in the Prospectus Regulation.

Although one might expect the final price or the number of transferable securities to qualify as part of the 'necessary information', issuers are permitted to omit these details from a prospectus (for example, where the issuer intends to approach retail investors to discover the level of interest in a particular issue before determining these elements). However, in these circumstances, the prospectus must instead contain information regarding the criteria or conditions which will be applied to fix the price (or, if applicable, the ceiling price) and the number of transferable securities to be offered. If the issuer does not present this information, investors who have accepted offers to purchase or subscribe will be entitled to withdraw their acceptances within five business days of publication of the final fixed price and number of transferable securities.

In certain cases, the SFSA (like other financial regulators in Europe) has the authority to grant derogations from the duty of disclosure. The SFSA can do this where it finds either that publication of the information would be seriously detrimental to the issuer and the omission of the information would not mislead the public, or if the information is of minor importance and would not influence the assessment of the financial position and prospects of the issuer, offeror or any guarantor.

The SFSA can also allow issuers to omit information required under the Prospectus Regulation in cases where it determines that the information is not relevant to the issuer's line of business or legal form or to those transferable securities to which the prospectus relates (where possible, the prospectus will contain comparable information).

A prospectus must include audited financial information covering the last three financial years (a shorter period is allowed where the issuer has not been in operation for three years). A proportionate disclosure regime applies to small and medium-sized enterprises and companies with reduced market capitalisation (audited financial information covering the last two financial years), as well as to rights issues (audited financial information covering the last financial year). Special rules also apply to issuers with a complex financial history. If the issuer has published interim financial statements since the date of its last audited financial statements, those statements must be included in the prospectus. If the prospectus is dated more than nine months after the end of the last audited financial year, the prospectus must contain interim financial information covering at least six months of the current financial year.

While there are no formal Swedish rules governing the contents of other main offering documents, investors will typically expect at least the same level of disclosure as in a prospectus. Swedish companies whose securities are listed on a regulated market must prepare consolidated accounts in accordance with the International Financial Reporting Standards (IFRS). Other companies can voluntarily apply the IFRS to consolidated accounts or can instead apply the Swedish GAAP (which are largely based on the IFRS).

Historical financial information included in a prospectus must be prepared in accordance with the IFRS or, if the IFRS is not applicable, the national GAAP for EU/EEA issuers. Consequently, there are typically no special considerations for EU/EEA issuers. For issuers incorporated outside the EU/EEA, historical financial information must be prepared in accordance with the IFRS or a third country's national GAAP, provided that the national GAAP is equivalent to the IFRS (including, for example, the US and Chinese GAAP). However, if the applicable accounting standards are not equivalent to the IFRS, the historical financial information must be presented in the form of restated financial statements. In any event, the historical financial information must be presented in a form consistent with the issuer's next annual financial statements, which must be considered, for example, where the issuer is in the process of an IFRS transition.

A working capital statement is required in any prospectus. It should be either a clean statement that there is sufficient working capital for the issuer's current requirements (meaning a minimum of 12 months from the date of the prospectus) or a negative statement together with a description of how the issuer intends to provide the necessary additional working capital.

A supplemental prospectus will be required if a significant new factor arises before the end of the offer period (or the first trading day).

As a general rule, the prospectus should be prepared in Swedish. However, a prospectus can be prepared in English in certain circumstances (for example, if the issuer is incorporated outside the EEA and has a primary listing in a regulated market outside the EEA). In such a case, the SFSA can require that the summary of the prospectus be translated into Swedish.

The issuer's board is responsible for the contents of the prospectus and must give assurances that it has taken all reasonable care to ensure that the information in the prospectus is, to the best of its knowledge, in accordance with the facts and contains no omission likely to affect its import. Only members of the board of Swedish limited liability companies have statutory prospectus liability under Swedish law. Shareholder litigation is unusual and case law on the matter is very scarce.

If any director or officer of the issuer is the seller of shares in the offering, they can potentially be held liable in their capacity as seller as a result of the 'contractual relations' between the buyer and the seller. Otherwise, in order for directors or officers of the issuer to be held liable under general tort rules on damages in non-contractual relations, the damages must be caused by a criminal offence (for example, undue market influence or fraud).

It is uncertain under Swedish law whether an issuer can be held liable to pay damages to its shareholders if the claim is related to the subscription or acquisition of securities issued by the company.

No response provided.

See 6.1 The Prospectus or Offering Document, above.

The SFSA has no discretion under the Prospectus Directive in this area, and the exemptions are essentially those laid down in Articles 3.2 and 4 of the Prospectus Directive.

Separate exemptions apply in relation to:

  • public offers; and
  • admission to trading.

As regards public offers, the key exemptions include where:

  • the offer is directed solely to qualified investors;
  • the offer is directed to fewer than 150 natural persons or legal entities who are not qualified investors within an EEA member state;
  • the offer relates to a purchase of transferable securities for a sum equivalent to not less than EUR100,000 for each investor;
  • each of the transferable securities has a nominal value equivalent to not less than EUR100,000; or
  • the aggregate sum which the investors will pay during a 12-month period within the EEA does not exceed the equivalent of EUR2.5 million.

Further exemptions apply in relation to share exchanges, securities issued as consideration in a takeover bid, shares offered or allotted in a merger or a demerger and distribution of dividends in the form of shares.

As regards the offering of shares to employees, foreign issuers can rely on an exemption in the Financial Instruments Trading Act, which mirrors the provisions contained in Article 4.1 of the Prospectus Directive.

As regards admission to trading, the key exemption from publishing a prospectus where transferrable securities are admitted to trading is where the number of shares for which admission to trading has been sought during the immediately preceding 12-month period is equivalent to not more than 20% of the number of shares of the same class which were admitted to trading on the same regulated marketplace at the commencement of the 12-month period.

Further exemptions apply in relation to share exchanges, securities offered as consideration in a takeover bid, shares offered or allotted in a merger or a demerger, shares offered or allotted to shareholders free of charge, distribution of dividends made in the form of shares, securities offered or allotted to present or former employees or board members of a company and shares created by conversion or swap of transferable securities or through the exercise of warrants.

The Swedish Financial Instruments Trading Act includes provisions concerning advertisements for public offers and admissions to trading on a regulated market. In addition to the more straightforward rules that the information in advertisements must not be inaccurate or misleading and must conform to the information provided in the prospectus, advertisements must also state clearly that a prospectus has been (or will be) published and where the prospectus is (or will be) available. Furthermore, the advertisement must be formatted and presented so that it is clear that it is an advertisement.

As the prospectus is the authoritative source of information about an offer to the public or an admission to trading, all information circulated about such offers and admissions to trading, whether for advertising or other purposes and whether in oral or written form, should be consistent with the information contained in the prospectus. This should be ensured by requiring that any information circulated does not contradict, or refer to information which contradicts, the contents of the prospectus. Moreover, the information circulated should be prohibited from presenting a materially unbalanced view of the information contained in the prospectus. Furthermore, as alternative performance measures can disproportionately influence the investment decision, information about an offer to the public or an admission to trading circulated outside the prospectus should not be permitted to contain such measures, if they are not contained in the prospectus.

Notably, even where the offering is exempt from the requirement to prepare a prospectus, all significant information in connection with the offering that is provided to any investor must be provided to all investors to whom the offer is directed.

Research reports are in general prepared by the underwriters/brokers participating in an offering applying normal blackout periods.

Swedish law does not contain any specific rules on liability for research reports and, accordingly, general principles on liability must therefore be applied.

If a contractual relationship exists between the research report provider and the equity investor, the investor may bring a claim against the research report provider under general contractual principles.

If no contractual relationship exists between the research report provider and the equity investor, any liability will normally require that the damage to the investor has been caused as a result of the research report provider committing a criminal offence. Criminal offences which can potentially form the basis for liability are fraud and market manipulation.

Specific rules on liability for damages exist where financial advice is given to consumers.

In order to mitigate potential claims for liability, investment banks will typically:

  • avoid the widespread distribution of the research reports;
  • ensure that the research reports include appropriate disclaimers; and
  • avoid the inclusion of forward looking statements in the research reports.

Whether analysts from institutions outside a syndicate advising on a specific transaction prepare research reports will depend on the transaction. However, there is no specific Swedish regulatory requirement in respect of such 'unconnected' research reports.

Accelerated bookbuilding is often the chosen method for large block trades, secondary equity offerings or in cases of private placements of primary offerings.

In general, the accelerated bookbuilding will be made on a best efforts basis and a typical commission structure would be partly fixed and partly performance-based as well as a discretionary element.

Market manipulation is a criminal offence. However, stabilisation of financial instruments executed in accordance with the rules in the EU Market Abuse Regulation (Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2016 on market abuse and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC, as applicable from time to time) (MAR), and any other applicable regulations of the European Commission, is permitted. In accordance with those regulations, the stabilisation efforts in connection with an IPO or a secondary offering must not be initiated prior to the first day of trading, must not go beyond 30 calendar days after the first day of trading and the price paid can never exceed the offer price or subscription price.

In terms of quantum requirements, the exercise of an over-allotment facility by an investment firm or credit institution which is not covered by a 'green shoe' option cannot exceed 5% of the original offer and the 'green shoe' option cannot amount to more than 15% of the original offer.

There are no special rules regarding 'block trades'.

The underwriting agreement for a Swedish issuer will normally be governed by Swedish law.

See 10.3 Failure to Recognise Foreign Governing Law and/or Jurisdiction.

There have not been any cases where the choice of a foreign governing law and/or jurisdiction has not been recognised by the courts in Sweden.

Foreign judgments are generally enforceable in Sweden.

There are no special requirements for a contract, judgment or award to be enforceable in Sweden.

The enforceability of transaction documents related to an issuance of equity securities would not be affected by a shareholder being domiciled in a foreign jurisdiction.

There are no regulatory restrictions concerning foreign entities entering into equity transactions or offering their equity securities in Sweden.

The timetable for a main market IPO (from commencement of the process until completion of the offer and listing of the shares) normally extends to at least six to nine months.

An indicative timetable for a Swedish IPO typically includes the following steps, where 'T' means first day of trading:

  • T minus six months: internal preparations and gap analysis of the fulfilment of the listing requirements; if necessary, concert the accounts to IFRS; appointment of legal and financial advisers who commence due diligence of the issuer; meeting with the stock exchange and appointment of the exchange auditor; any restructuring of the issuer group is carried out.
  • T minus five months: preparing the equity story, commencement of the prospectus drafting as well as legal due diligence.
  • T minus four months: appointment of the board which satisfies the listing requirements (in order for the board to participate in the preparation of at least one, preferably two, interim reports prior to the IPO).
  • T minus three months: draft prospectus is submitted to the SFSA for review; adoption of corporate governance structures and policies which satisfy the requirements of a listed company.
  • T minus two months: IPO due diligence report submitted to the exchange auditor, who submits their report to the Listing Committee of the exchange as well as a draft prospectus that includes the first round of comments from the SFSA.
  • T minus one month: Listing Committee meeting of the exchange to resolve on whether to approve the listing; IPO decision point.
  • T minus two weeks: SFSA approval and publication of prospectus; announcement of IPO price range; commencement of bookbuilding procedure and management road show.
  • T minus 1 day; signing of placing agreement, deciding on allocation and final price.
  • T: pricing announced and first day of trading.
  • T plus two business days: settlement.
  • T plus 30 calendar days: end of stabilisation period.

No specific tax issues (for example, stamp duty or transaction taxes) arise in relation to the issuance of new shares in Sweden.

Holders of listed and unlisted shares are subject to different tax rules. The general summary below outlines the main differences, but it is not exhaustive and only covers holders who are individuals or limited liability companies.

Individuals

For Swedish tax resident individuals, income on capital (for example, dividends and capital gains on listed shares) is subject to a 30% flat tax rate. Capital gains and dividends on unlisted shares are taxed at an effective tax rate of 25% (as only 5/6 of such gains are taxable).

The tax basis for all shares of the same class and type is calculated together in accordance with the average cost method. Upon the sale of listed shares the tax basis may alternatively be determined according to the standard method as 20% of the sales proceeds after deducting sales costs.

Capital losses on listed shares are fully deductible against taxable capital gains on shares and other listed equity-related securities realised in the same year. 70% of capital losses on shares that cannot be offset in this way are deductible against other capital income.

Capital losses on unlisted shares are deductible to 5/6 (approximately 83.3%) against taxable capital gains on shares and listed equity-related securities. 70% of the capital losses that cannot be offset in this way are tax deductible to 5/6 (resulting in such losses in practice being deductible to approximately 58.3%) against other capital income.

Limited Liability Companies

For a limited liability company, all income, including taxable capital gains and dividends, is taxed as business income, currently at a flat rate of 22%. Dividends and capital gains on unlisted shares held as capital assets are generally tax exempt for corporate shareholders under the Swedish participation exemption regime. As a consequence, losses on those shares are not tax deductible.

However, dividends and capital gains on listed shares are generally subject to tax unless certain voting and holding period requirements are met. Capital gains and dividends on listed shares are tax exempt provided all the following criteria are met:

  • the shares are held as capital assets;
  • the shareholding constitutes at least 10% (by voting power) of the company or relates to the business of the shareholder or its affiliates; and
  • a 12-month holding period has been observed.

Deductible capital losses on listed shares and other equity-related securities can only be deducted against taxable capital gains on those securities. Companies within the same group can also, if certain requirements are fulfilled, offset losses against such gains within the group.

Shareholders Who are Not Tax Resident in Sweden

Swedish withholding tax is normally payable for shareholders not tax resident in Sweden who receive dividends from a Swedish limited liability company. The domestic withholding tax rate is 30%. However, the tax rate is generally reduced under applicable double tax treaties to avoid double taxation between Sweden and certain other countries. Under domestic law, foreign corporate shareholders are generally not subject to withholding tax on dividends on unlisted shares.

See 12.1 Main Tax Issues When Issuing and Listing Equity Securities, above.

See 12.1 Main Tax Issues When Issuing and Listing Equity Securities, above.

See 12.1 Main Tax Issues When Issuing and Listing Equity Securities, above.

Key continuing obligations applicable to Swedish listed companies relate to:

  • financial reporting;
  • disclosure of inside information;
  • disclosure of additional information as required by the stock exchange; and
  • compliance with good practice on the stock market, including the Swedish Code of Corporate Governance.

The Swedish Code of Corporate Governance (the 'Swedish Code') is applicable to all companies listed in Sweden. The Swedish Code includes provisions regarding, among other things:

  • execution of a shareholders meeting;
  • the tasks of the nomination committee;
  • the tasks of the board;
  • the size and composition of the board;
  • the tasks of directors and the chairman; and
  • board procedures.

The provisions are subject to the principle of 'comply or explain', meaning that a company can choose to deviate from a provision provided that it explains the reasons for doing this. The board must annually provide a corporate governance report.

The Swedish take-over rules form part of the rulebook for issuers applicable to all listing venues in Sweden. As a result, all companies listed in Sweden must adhere to the Swedish take-over rules. The requirements regarding, among other things, mandatory bids and defence measures are not, however, applicable in relation to foreign issuers/target companies listed in Sweden. The Swedish Securities Council is the main body charged with interpreting and granting exemptions from the Takeover Act and the Takeover Rules and otherwise with issuing statements as regards good practice on the stock market.

In general, the continuing obligations also apply to foreign incorporated issuers. Disclosures should normally be made in Swedish. However, disclosures may be made in English in certain circumstances (for example, if the company is incorporated outside the EEA and has a primary listing in a regulated market outside the EEA).

As a consequence of the requirement that all market participants shall have simultaneous access to any inside information, if an issuer discloses information as a result of the requirements of another regulated market or trading venue, the issuer is required to simultaneously disclose such information under the rules of Nasdaq Stockholm. This applies even if such information would not normally be subject to any disclosure requirement under Swedish rules. As regards other ongoing disclosure requirements, it is possible to seek an exemption from the exchange (for example, due to a conflict between the rules and the requirements in the issuer’s jurisdiction). One example would be where the rules in the issuer’s jurisdiction allows that quarterly reports are to be published later than within two months from the end of the reporting period.

No exemption is available from the ongoing obligations relating to:

  • the disclosure of transactions by board members, management and major shareholders;
  • the ban on transactions prior to the publishing of regular interim reports; or
  • the maintaining of an internal insider list.

As regards corporate governance, non-Swedish issuers whose shares are admitted to trading on a regulated market in Sweden will be required to apply either the Swedish Code or the corporate governance code in force in the jurisdiction where the issuer has its registered office or its primary listing. If the latter is chosen, the issuer must include a statement in its corporate governance report describing the important aspects in which the issuer’s conduct deviates from the Swedish Code.

A breach of the listed company's continuing obligations can lead to fines being imposed by the SFSA and to sanctions from the exchange. Such sanctions range from de-listing, fines or a warning.

Advokatfirman Vinge KB

Stureplan 8
Box 1703
111 87 Stockholm
Sweden

+46 10 614 30 00

contact@vinge.se www.vinge.se
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Law and Practice

Authors



Advokatfirman Vinge KB was established through a merger between a number of leading Swedish firms in 1983 and is one of the largest firms in Scandinavia today, with some 300 lawyers in seven Swedish and overseas offices. Vinge is a full-service law firm, with a substantial international practice, which has acted in most of the major M&A in Sweden in recent years and has consistently achieved top positions on Mergermarket’s list of M&A advisers in the Nordic market as well as Tier 1 rankings with the leading ranking institutes. The firm regularly represents clients in connection with large international financing transactions, including project financing and structured finance arrangements. Vinge also advises domestic and international clients within a number of specialist areas, such as competition law and compliance, employment, IT, insolvency, insurance, IP, litigation and arbitration, marketing, private equity, property, public procurement, tax, telecommunications, and transport. In addition to four offices in Sweden, the firm has a presence in Brussels.

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