Sweden’s regulations concerning company and insolvency law should be reformed in some respects.
The decisions taken by the European Court of Justice in the Centros, Überseering and Inspire Art cases and the EU Insolvency Regulation have created very different prerequisites for the regulating of company and insolvency law in Sweden. As a result of these decisions, it is now possible to set up a company in one member state and then run the main part of the company’s operations in another member state. Because of the Insolvency Regulation, creditor protection rules in the Swedish Companies Act and the corresponding regulations within insolvency law need to be adapted to the Regulation’s conflict of law and jurisdiction rules in order to strengthen the protection of company creditors in conjunction with transboundary insolvency procedures.
In recent years, there has been rapid change in the regulating of company law in several EU countries and also in the USA, mainly concerning private limited companies. Examples of changes are that rules for forming companies have been simplified and that creditor protection rules are now based on a company’s liquidity and solvency rather than on its restricted capital. Certain member states have reformed the rules governing the existing form of private limited company. Other countries have introduced new forms of private companies, the purpose being in several cases to create suitable forms of operation for young entrepreneurs.
In the light of the rules introduced in the UK’s Companies Act in 2006, a stronger focus on the responsibility of a company’s management has made it urgent for Sweden too to clarify the rules in the Swedish Companies Act concerning the duty of loyalty of directors and managing director. In several member states, the position of minority shareholders has been strengthened, for example, by them being given more opportunity to plead a cause on behalf of the company against a body member.
In the light of developments in the world around us, it is concluded that Swedish company law appears to be outdated and in urgent need of reform. The most pressing need is to coordinate the regulating of company and insolvency law in order to strengthen the protection of company creditors when Swedish companies or businesses that are based in another member state conduct transboundary operations.
International developments in the field of company law – effects on Swedish law