A limited company is a legal entity, which means that the company has its own rights and obligations, separate from the owners. The owners, also known as shareholders, have invested capital in the company by purchasing shares. Their liability for the company’s debts is limited to the capital they’ve invested. This makes a limited company an attractive option for entrepreneurs who want to protect their personal finances.

Starting and running a limited company

To start a limited company in Sweden, you need an initial capital of at least 25,000 SEK. The capital is used to purchase shares in the company. Once you register the company with the Swedish Companies Registration Office, it’ll receive a corporate identity number, which will function as the company’s identification number. After registering, the limited company becomes a separate legal entity.

Articles of association

When you start a limited company, you have to draft articles of association. The articles of association are an important document that contains the rules governing the company and its owners. It’s mandatory to have articles of association, and they have to include certain information required by law, such as the company’s name, the nature of its business, the size of the share capital, the number of shares, and how the board of directors is appointed. The articles of association can also include specific rules on how shares may be transferred and what could happen in the event of a change in ownership.

Shareholders’ agreement

Although not mandatory, it’s recommended that shareholders establish a shareholders’ agreement. Such an agreement regulates the relationship between the shareholders and can include important provisions on decision-making, share sales, and how to resolve potential disputes. A shareholders’ agreement can help prevent conflicts and misunderstandings, which is especially important in companies with multiple owners.

Board of directors and management

A limited company has to have a board of directors responsible for the company’s management and organization. The shareholders appoint the board at the annual general meeting. The board must consist of at least one member. In larger limited companies, you also need to appoint a managing director (CEO). The CEO is responsible for the day-to-day operations and reports to the board.

Accounting and financial reporting

All limited companies are required to keep accounting records and prepare an annual report, which must be submitted to the Swedish Companies Registration Office. The annual report provides an overview of the company’s financial position and results. Larger companies also have to have an auditor who reviews the company’s accounts and reports whether they comply with applicable laws and regulations.

Taxes and fees

Limited companies are taxed as separate legal entities, which means the company pays corporate tax on its profits. Additionally, the company must pay employer contributions if there are employees. If you, as an owner, withdraw dividends and salaries from the company, you have to pay a separate tax for those incomes.

Advantages of a limited company

• Limited liability: Shareholders’ liability is limited to the capital they’ve invested, which protects their personal assets.
• Potential for expansion: It’s easier to raise new capital by selling shares to new investors.
• Credibility: It can be seen as more stable compared to other business forms, which can make it easier to obtain credit and enter into agreements.

What we help with in a limited company

Legal advice and consultation
We help you understand what you need to start and run a limited company. We provide consultation on everything from articles of association to board work and taxes.

Registration assistance
We help you register your limited company with the Swedish Companies Registration Office and make sure that all necessary documents are in order.

Support and representation in disputes
If disputes arise between shareholders, we provide legal advice and help to resolve them through negotiation or other legal processes.

FAQ about limited companies

What’s the difference between a limited company and a sole proprietorship?
In a limited company, the owners’ liability is limited to the capital they’ve invested, while in a sole proprietorship, the owner is personally liable for the company’s debts.

How much capital is required to start a limited company?
You need share capital of at least 25,000 SEK.

Do all limited companies need an auditor?
Larger limited companies have to have an auditor, but smaller companies could be exempt from this requirement if they don’t exceed certain thresholds for turnover, balance sheet total, and number of employees.