Splitting of limited companies

A law has now been passed allowing a limited company to be broken up under company law.

There has been nothing to prevent a private limited company from splitting up tax law. However, if the division was to be carried out under company law, it was necessary to transform the joint stock company into a public limited company before splitting could take place. It is a relatively simple process which, however, assumes that the capital requirements of the Companies Act are met.

The Act introduces rules on division in the Limited Liability Company Act, so that private limited companies avoid the hassle of transforming themselves into a limited company with the consequent increased financial burden. According to the proposal, the rules on division of the Swedish Companies Act apply mutatis mutandis to limited liability companies.

Entry into force

The Act takes effect for divisions enacted on or after 1 October 2003. Since a division can be made in company law with a retroactive effect of up to six months, the earliest date for the division of a limited liability company will be 1 April 2003.

‍

Disclaimer

‍The above information is for guidance purposes only, and we accept no responsibility for decisions made based on this information without prior individual advice. We accept no responsibility for errors or omissions.

‍