Is your business ready for Brexit?

Read below about the consequences Brexit may have on your business here in Sweden. Companies with company officials who are resident in the UK and British companies with branches in Sweden will be affected the most. Many companies and associations will be affected because many of the rules depend on whether a company is based within the European Economic Area (EEA) or not.

Company officials living in the UK

Swedish legislation contains certain requirements concerning residency within the EEA. Does your limited company or economic association have company officials residing in the UK? After Brexit, the board may not be fulfilling its EEA residency requirements.

Residency requirements apply to:

  • the board members (at least half of them including employee representatives must be resident within the EEA)
  • the deputy board members (at least half of them including employee representatives must be resident within the EEA)
  • the managing director
  • all deputy managing directors
  • signatories (at least one must be resident within the EEA).

If your company does not fulfil the residency requirements after Brexit, the shareholders’ meeting must appoint officials who are resident within the EEA. It is also possible to apply to Bolagsverket for exemption from the residency requirements .

Residency requirements apply to limited companies, joint-stock banking companies, insurance companies, mutual insurance companies, insurance associations, European companies (SEs), economic associations, tenant-owner associations, housing associations, European cooperative associations (SCEs), European economic interest groupings (EEIGs), cooperative tenancy right associations, cooperative banks, savings banks and collective farming associations.

Auditors

Authorised and approved auditors must be resident in Sweden or in another country within the EEA. The Swedish Inspectorate of Auditors (Revisorsinspektionen) deals with any questions about exemptions.

British companies with a branch in Sweden

British companies will no longer be able to cite that their business operations are covered by the free trade and movement regulations as stated in the Treaty on the Functioning of the European Union. Businesses in Sweden that are run by Swedish citizens and citizens of other countries who are residing outside the EEA must appoint a company official who is resident in Sweden to be responsible for the business operations in Sweden.

After Brexit, a Swedish branch owned by a British company will be owned by a third country company. Rules for branches owned by third country companies will apply.

The managing director of the branch must be resident within the EEA. If the managing director is resident in the UK, this does not meet the legal requirements after the UK becomes a third country. In special circumstances Bolagsverket may grant exemption from the residency requirements.

Annual reports must be submitted for both the British company and the branch after Brexit.

Swedish companies with branches in the UK

If you have registered a branch in the UK or plan to do so, you should be aware that UK law rather than EU law will apply in how you run your branch. Current UK legislation may change as a result of the UK becoming a third country and this could affect your branch.

Cross-border mergers

Companies embarking on a cross-border merger must be located within the EEA. Both limited companies and economic associations can be involved in cross-border mergers. When the UK leaves the EU and becomes a third country, EU rules about cross-border mergers may no longer apply for companies in the UK. This is more likely if the UK leaves without a withdrawal agreement. You should therefore make sure you check which rules apply if you are planning a merger involving a UK company.

European business types

Bolagsverket is the registration agency for several European business types. These are European companies (SEs), European cooperative associations (SCEs), European economic interest groupings (EEIGs) and European groupings of territorial cooperation (EGTCs). These business types are based on EU ordinances.

Formation of one of these business types requires, in simplified terms, that companies located in one of the EU member states must participate in its formation or that they are subject to the laws of a member state. After the UK leaves the EU, the laws governing European business types may no longer apply to companies in the UK. This is more likely if the UK leaves without a withdrawal agreement.

Brexit may mean that UK companies cannot be involved in the formation of these types of businesses.

If you are planning to register one of the European business types in the list above with Bolagsverket and at least one UK company is involved in its formation, you are welcome to contact us and we will do our best to answer your questions.

Bank certificates

Bank certificates must be issued by banks, credit market companies or foreign credit institutes that are comparable to these, located within the EEA.

When the UK becomes a third country, we will no longer be able to accept bank certificates issued from the UK for registration of new limited companies, issue of new shares, issue of convertible debt instruments and subscribing for shares based on subscription options.

Company information via the e-Justice Portal

After leaving the EU, information about UK companies will no longer be available through the e-Justice Portal. The plan to interconnect registers such as the insolvency registers of the member states in the portal will not include the UK.

Do you need more information about Brexit?

Read more about the possible effects of Brexit on your business on the websites listed below.

government.se External link. Swedish Government

gov.uk External link. UK Government

EU-kommissionen External link. European Commission

National Board of Trade Sweden External link.