You must act within the powers imposed upon you by the relevant legislation, the shareholders, the supervisory board (if any), the company’s Articles of Association and any specific power of attorney, if any. You are also required to implement the decisions approved by the shareholders and act in accordance with any specific powers that may have been delegated by the shareholders or by the Board of Directors itself, if any.
Duties – skill and care
In exercising directors’ powers, you are required to exhibit the due diligence of a prudent businessman when acting for the company.
Duties – general
The affairs of a company are managed by the directors and as a result they have all powers which are useful or necessary to implement the company’s purpose (with the exception of those powers which are explicitly reserved to the GSM). A director therefore has an implied duty to ensure that they work in the best interest of the company and several other duties are captured by this, such as:
- a duty of loyalty
- a duty not to compete with the interests of the company
- a duty of discretion
- a duty to avoid a conflict of interest
Directors must act with a duty of care which is determined according to the professional skills which can reasonably be expected from a “normally prudent and reasonable” director, facing the same factual circumstances.
Directors are expected to perform their duties to the best of their abilities and they must have sufficient knowledge regarding the company’s operations and objectives in order to effectively dispense with these duties.
Under the Companies Act, the board of directors is responsible for the organisation of the company, management of its affairs and to regularly assess its financial position. However it is expected that the managing director shall attend to the day-to-day management of the company in accordance with the instructions from the board, take measures to ensure that the accounts are maintained pursuant to law and that the management of funds is conducted in a sound manner.
- You shall ensure that the company is structured in such a manner that accounting, management of funds and the company’s finances in general are monitored in a satisfactory manner.
- The chairman shall ensure that minutes are kept at each meeting to document the Board’s decisions and other important measures taken. A clear documentation of the Board’s decisions in the minutes is important in, for example, the issue of individual accountability.
Duties – other
There are many other areas of law that impose duties on directors and senior managers:
- You have an obligation to ensure that the entity and its activities at all times comply with the regulations set out in the Swedish Work Environment Act (1977:1160) (Arbetsmiljölagen) and AFS 2001:1 Systematic Work Environment Management (Systematiskt arbetsmiljöarbete). This means that you are responsible to systematically plan, direct and control activities in a manner which leads to the working environment meeting the prescribed requirements for a good working environment. This includes investigating work injuries, continuously investigate the hazards of the activity and take any measures necessary. Failure
- to comply with the Swedish work environment regulations could lead to imprisonment.
- Like all employees, you must comply with AntiBribery and Corruption legislation, including the UK Bribery Act and the US Foreign Corrupt Practices Act, and must understand, follow and promote internal policies and procedures.
- You must comply with all competition law and regulations. This includes complying with the Swedish Competition Act and Articles 101 and 102 in the Treaty of the Functioning of the European Union (TFEU). The Swedish Competition Act, as well as the EU competition rules, contains two main provisions. These are a prohibition against anti-competitive cooperation and a prohibition against abuse of a dominant position. The Competition Act also contains rules for control of concentrations between undertakings. It is crucial that directors have an understanding of these regulations since violations may result into substantial damages and other adverse consequences.
- You must comply with all areas of tax law and regulations. Failure to do so could leave you personally liable for taxes. If a tax is not paid, for example in cases of insolvency, there is risk for personal liability. This is avoided by taking actions to dissolve the business in a sensible manner in due time, which would mean filing for bankruptcy or business reconstruction before the due date of the taxes. If tax laws are not complied with there is also a risk for liability to pay damages to the Company.
- Generally your corporate secretarial provider will maintain your statutory records. However, it is the duty of the directors to ensure that records are maintained. In Sweden the corporate secretarial provider shall only keep copies. For example, the directors must ensure that the share ledger is kept up to date. Failure to do so would be a criminal offense. Also the directors must ensure that accounting and minutes from board of directors meetings and shareholders meetings are kept.
Data Privacy requirements are regulated by the Personal Data Act (Personuppgiftslag (1998:204)) (PDA) in Sweden. The PDA applies to the controllers of ‘personal data’ and includes all personal data which relates to an individual, which in some cases has been ruled as wide as an IP address. Directors and data controllers should ensure they are aware of the regulations relating to the processing of personal data.
The legislation stipulates that personal data may only be collected for specific, explicitly stated and legitimate purposes; it cannot be used for any other reason. In addition, the company must ensure that personal information is processed in accordance with legislation, including:
- always processed in the correct manner and in accordance with good practice
- only collected for specific, explicitly stated and justified purposes
- not processed for any purpose that is incompatible with the purpose for which the information was originally gathered
- adequate and relevant for the purposes of the processing
- not excessive – only the required sets of personal data can be processed and they must be linked to the purposes of the processing
- correct, and if necessary up to date
- rectified, corrected, blocked or erased, if it is incorrect or incomplete with regard to the purpose of the processing
- not kept for a longer period than necessary with regard to the purpose of the processing
In Sweden, the applicable legislation responsible for governing bribery/corruption is integrated into the Swedish Penal Code. The main provisions of the legislation relate to an improper benefit (be it financial or otherwise) being offered, accepted or requested, in relation to the performance of a function or activity. There are no minimum thresholds for the qualification of an improper benefit, matters must be assessed on a case by case basis. The criminal liability is always personal for the responsible directors and officers of the corporation, but the corporation may also be punished with fines.
Based on the registered business purpose of the Swedish company, and since it is not registered for any permits with the Swedish FSA, the Swedish AML legislation only applies to cash sales exceeding EUR 15,000. For such cash sales the directors are obliged to ensure that sufficient Know Your Customer research is carried out.
If there is a reason to believe that the equity of the company has fallen below 50% of the registered share capital the directors must, amongst others, prepare an extraordinary balance sheet and issue notice for an extraordinary shareholders’ meeting. If this is not done, directors risk personal liability for company debts.
Latest version updated
10th April 2018