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Sweden

Winding up

Updated 12/2012

Legal requirements

Regulations for the liquidation of limited companies can be found in the Limited Companies Act. Regulations for the liquidation of partnerships and simple companies can be found in the Partnerships Act. The financial consequences come under the Income Tax Act.

Liquidation

Liquidation is the winding up of a company where the assets (where needed) are converted into money, debts are paid and any surplus is distributed.

When filing for bankruptcy is the only option left for a business owner, it pays to cut losses, initiate proceedings sooner rather than later, and move on to a new business project.

Administrative procedures

Winding up and deregistration

Limited companies

When a company is in liquidation, it is represented by its board and managing director (MD) until a liquidator has been elected. In most cases, it is the Swedish Companies Registration Office that decides who will be the liquidator for a limited company.

After that, the company is represented by the liquidator who replaces the board and the CEO. The liquidator carries out the liquidation, such as winding up the company until it is dissolved.

Decision on voluntary liquidation is decided at an Annual General Meeting. The general meeting decides whether liquidation should be immediate or on a specific date.

Liquidation may also be decided upon by a court or the Patent and Registration Office, in which case it is referred to as compulsory liquidation.

The liquidation decision must be submitted to Swedish Companies Registration Office, and a fee has to be paid.

The documentation should contain information on:

  • the reasons for the liquidation;
  • the date on which the company proposes to enter into liquidation;
  • the estimated date of the distribution;
  • the estimated size of the distribution;
  • any proposals to the liquidator.

Business operations shall also be de-registered as a tax subject at the Swedish National Tax Board. This can be done via the online services provided by the Swedish National Tax Board on verksamt.se.

Economic association

Economic associations are normally wound up or dissolved via liquidation.

This involves assets being used to pay debts, and any surplus is distributed in accordance with the articles of association.

The association can go into liquidation on the basis of a decision taken at the general meeting of the association, or a decision taken by the district court or the Swedish Companies Registration Office. The board and the managing director become inactive immediately and are replaced by one or more liquidators.

If a report concerning an economic association has not been submitted to the registration authority during the past 10 years, the Companies Registration Office can investigate whether the association is still conducting business. If it is not trading then it is removed from the register by the Companies Registration Office. The association is thereby dissolved.

For a decision of the general meeting on voluntary liquidation to be valid , it is required either

  • that all those qualified to vote in the association were present at the general meeting of the association and voted for the decision; or
  • that the association made the decision at two consecutive general meetings, the first one with a simple majority and the second with a two-thirds majority of voters. If there are reasons for compulsory liquidation, only a simple majority is required at the general meeting of the association.

Once a decision has been taken, it must be reported to Swedish Companies Registration Office.

Partnerships

Liquidation can be managed by the partners or by the liquidator, an external individual selected by the district court who is usually a solicitor.

The company's debts are paid and business operations wound up. Any surplus is distributed among the shareholders.

When a decision to undergo liquidation has been made, the words " in liquidation" must be included in the partnership's official name. The partners are also obliged to report this information to the Patent and Registration Office (PRV).

After liquidation, the company should be deregistered via the online service provided by the Swedish Companies Registration Office on verksamt.se.          

Sole traders

A sole trader ceases business when its owner takes over the assets of the business.

This is classified as an own withdrawal from the business, and must be submitted for tax purposes.

The withdrawal must be entered into the books and verified with regard to the assets and debts affected and their value. Entry in the accounts of the withdrawals must be carried out no later than at the end of the month after the business is terminated.

A sole trader registered with the Companies Registration Office must be deregistered.

This can be done via the online services provided by the Swedish Companies Registration Office on verksamt.se.

In addition, information regarding the cessation of business operations must be sent to Swedish National Tax Board. This authority will remove the company in question from its VAT and corporation tax registers.

The accounts must be completed in the usual manner. The company's debts to suppliers and outstanding taxes must be paid and a final tax return for the business must also be submitted.

Resources

More information on liquidation of a company can be found at: Swedish Companies Registration Office and on the business portal verksamt.se.

Help & advice

Help & advice

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