Branch

Content

A foreign business enterprise that wishes to engage in business activities in Sweden without registering a subsidiary, shall normally register a branch. A branch is the branch office of a foreign business enterprise with a separate administration in Sweden. A company may have only one branch in Sweden. The branch is to have a managing director. The managing director represents the branch and is liable to register the branch with Bolagsverket.

Some typical features of a branch

• The branch is not a separate legal entity but a part of the foreign business enterprise.
• The branch is subject to Swedish law and the decisions of Swedish authorities as regards legal matters arising in connection with its business activities in Sweden.
• The branch has no share capital but its assets and liabilities are a part of the total assets of the foreign business enterprise.
• A branch is to keep its own accounting records. These accounting records are to be separate from the foreign business enterprise, in order, among other things, to be able to submit separate accounts for the branch, see below under Accounting documents.
• The accounts of the branch and the administration of the managing director are – when required – to be examined by an authorized or approved public accountant.

Service enterprises with temporary business activities in Sweden

A foreign enterprise within the European Economic Area delivering services as described in the EC service directive need not register a branch in Sweden. This applies if the enterprise only temporarily carries on business activities in Sweden.

The registration number of the branch

When Bolagsverket has registered the branch, it will be given a ten-digit registration number, for instance: 516402-1007.

The managing director

The managing director is to have a special power of attorney. One or more deputy managing directors for the branch can be appointed. This person must also have their own power of attorney of the same type. The managing director and the deputy managing directors of the branch are to be resident within the European Economic Area (EEA). Contact Bolagsverket about questions concerning permits for exceptions from the residence requirement.

The managing director is entitled to sign for the branch. The deputy managing director may also be entitled to sign for the branch.

Special person authorized to receive service of process

If the managing director of the branch is not resident whithin the European Economic Area (EEA), the foreign business enterprise shall authorize a person who is resident (registered in the civil register) in Sweden to receive service of process on its behalf. The special person authorized to receive service of process may not be a minor under Chapter 11, section 7, of the Parental Code. The name of this person is to be notified to Bolagsverket for registration.

Auditor

Branches fulfilling at least two of the following criteria for each and every one of the two most recent financial years must have an auditor

• more than 3 employees (average)
• a balance sheet total of more than 1.5 million kronor
• a net turnover of more than 3 million kronor

Branches carrying on financial business activities pursuant to Article 12, second paragraph of the Foreign Branch Offices Act (1992:160) must always have an auditor. It may also be required that the auditor is an authorized public accountant or approved public accountant who has passed the examination of professional competence.

The auditor of the branch is to be an approved or authorized public accountant. If a registered accounting firm is appointed as auditor, the name of the principally responsible auditor shall be stated. The Swedish Supervisory Board of Public Accountants decides on who is an authorized or approved public accountant.

Unlike other forms of organization, there are no limits regarding the size that indicate when an authorized or approved public accountant who has passed the examination of professional competence is required.

Accounting documents

The branch is to keep its own accounting records which must be held separate from the accounting records of the foreign business enterprise. Concerning how the accounting records are to be concluded and filed, there are certain differences between branches of foreign business enterprises which are subject to the legislation of a state within the European Economic Area (EEA) and those that are not.

Deadline for filing the accounting documents

The accounting documents for both the branch and the foreign business enterprise must be filed with Bolagsverket within three months from the date that the accounting documents and – when required – the auditor's report of the foreign enterprise were presented to the owners of the enterprise, however not later than seven months from the end of the financial year of the branch.

Summary of the provisions

The provisions regarding setting up and filing of accounting documents may be summarized as follows:

Branches of business enterprises within the EEA , comparable with limited liability companies:

• The accounting records must be concluded by annual accounts (årsbokslut).
• To be filed with Bolagsverket? No, not for the branch, but the annual report (årsredovisning) for the foreign enterprise must be filed.

Branches of business enterprises within the EEA, not comparable to limited liability companies:

• The accounting records must be concluded by an annual report (årsredovisning).
• To be filed with Bolagsverket? Yes, both the annual report for the branch and the annual report for the foreign enterprise.

Branches of business enterprises outside the EEA:

• The accounting records must be concluded by an annual report (årsredovisning).
• To be filed with Bolagsverket? Yes, both the annual report for the branch and the annual report for the foreign enterprise.

Branches of business enterprises within the EEA

If the foreign business enterprise has a legal form, which is comparable with a limited liability company, the accounting records of the branch office are to be concluded by annual accounts (årsbokslut), prepared in accordance with the Bookkeeping Act. When an auditor is required, he/she must examine the annual accounts, the accounting records and the managing director's administration. The auditor's report is to be submitted to the managing director of the branch. The annual accounts are to be signed by the managing director of the branch.

Each year, the branch is to file a certified copy of the annual report (or the equivalent) of the foreign business enterprise and – when required – the auditor's report with Bolagsverket, if these documents have been made public in the country of origin of the business enterprise. The annual accounts of the branch are not to be filed with Bolagsverket.

The branches of business enterprises within the EEA that does not correspond to limited liability companies follow the same rules as branches of business enterprises outside the EEA, see below.

Branches of business enterprises outside the EEA

If the foreign business enterprise, regardless of the form of the enterprise, is situated outside the EEA, the accounting records are to be concluded by an annual report (årsredovisning) drawn up in accordance with the Annual Accounts Act. When an auditor is required, he/she must examine the annual report, the accounting records and the administration. The auditor's report is to be submitted to the managing director of the branch, and he/she is to sign the annual report. A certificate of adoption (fastställelseintyg) on the annual report of the branch is not required since there is no annual general meeting of shareholders for branches.

Each year, the branch is to file a certified copy of its own and the foreign business enterprise's annual report (or the equivalent) and – when required – the auditor's report with Bolagsverket. The documents of the foreign business enterprise only need to be filed if they are made public in the country of origin of the foreign business enterprise.

Branches of banking and insurance companies

Regarding branches of banking and insurance companies, the same provisions as above generally apply, i.e. the provisions apply according to whether the foreign enterprise is registered within or outside the EEA. The applicable provisions are stipulated in the Annual Accounts Act for Credit Institutions and Securities Companies and the Annual Accounts Act for Insurance Companies. Furthermore, the Bookkeeping Act is applicable for the annual accounts.

Language

The accounting documents for the branch are to be drawn up in Swedish or translated into Swedish.

The accounting documents for the foreign business enterprise are in accordance with the Foreign Branch Offices Act to be drawn up in Swedish or translated into Swedish. However, Bolagsverket also accepts accounting documents in (or translated into) English, Danish or Norwegian.

The translation must not be authorized.

Deregistration and conditional fine

Bolagsverket may – without application from the branch – deregister the branch if no accounting documents for the branch or the foreign company have been filed with Bolagsverket for the two most recent financial years.

Furthermore, Bolagsverket may by a conditional fine order the managing director of the branch to file the accounting documents if they have not been filed within the statutory time limit. As the Foreign Branch Office Act states that the accounting documents must be drawn up in or translated into Swedish, Bolagsverket may include this requirement in the conditional fine order.

Stationery

The letters, invoices, order forms and websites of the branch are, in addition to the business name of the branch and the address, to contain information on the legal form of the foreign business enterprise and the location of its registered office.

Furthermore, this must be included:

• Information on the register in which the foreign business enterprise is registered.
• Its number in this register.
• The name and registration number of the branch, stating the Swedish register in which the branch is registered (state, for instance: ”Registered in Bolagsverket's branch register”).

Bolagsverket is able to instruct the managing director of the branch, on pain of a conditional fine, to comply with the obligations of the branch in matters concerning stationary, invoices and order forms.

If there are extenuating circumstances, Bolagsverket may allow a branch not to provide information about their company name on their websites. Such permit shall be limited to certain time and may be conditional

Measures to be taken before business activities may commence

Notification must have been sent to Bolagsverket before the business activities of the branch may commence. This notification is to be made by the managing director of the branch. Bolagsverket examines, among other things, the power of attorney for the managing director, the business activities of the branch, and makes a decision on whether the proposed business name of the branch can be approved.

The business name

The business name of the branch must contain:

• The addition ”filial”, ”filial till”, or the equivalent.

If the foreign group that the foreign business enterprise applying for a branch is part of is already active in Sweden, it must be borne in mind that that enterprise applying for a branch may need consent for registration of the branch from one or more companies in the group.

Notification to Bolagsverket

Please, use form New registration – branch, 887 e. The notification is to be signed by the managing director of the branch. The registration fee is to be paid at the same time as the notification is submitted. Registration fees are shown in the price list.

The notification is to include

1. Information on the business name of the foreign business enterprise, its legal form, nationality and registered office and postal address.
2. The proposed business name of the branch.
3. The postal address where the branch office is to be located.
4. Particulars of the financial year of the foreign business enterprise and the branch.
5. Particulars of the registration number of the foreign business enterprise and the foreign register in which it is registered.
6. Personal particulars of the managing director of the branch, the deputy managing director (if any), the special person authorized to receive service of process (if such appointment is to be made) and the auditor and deputy auditor (if any) of the branch. The personal particulars are to include:
   • the name and personal identity number or, in the absence of such number, the date of birth,
   • the postal address and
   • the municipality in which the person is registered in the civil register, if the postal address is different from the municipality of civil registration for the managing director and deputy managing director (if any) of the branch.
7. The person responsible for the audit, if an accounting firm has been appointed.
8. A solemn declaration that the managing director of the branch (and deputy managing director, if any) is not bankrupt or does not have an administrator under Chapter 11, section 7, of the Parental Code.
9. A solemn declaration that signatories are not bankrupt or do not have an administrator under Chapter 11, section 7, of the Parental Code, if the notification relates to a branch of a foreign banking company.
10. A solemn declaration that the special person authorized to receive service of process (if appointed) does not have an administrator under Chapter 11, section 7, of the Parental Code.
11. A solemn declaration that the auditors or deputy auditors (if any) fulfill the requirements of the Auditors Act (2001:883) for authorized or approved auditor.
12. A solemn declaration that the branch's managing director, deputy managing director, special person authorized to receive service of process, auditor, deputy auditor, principally responsible auditor and/or signatories, when the foreign company is a banking company, have accepted the assignments.
13. Notification of the business activities of the foreign business enterprise. Please note that the description of the business activities must be translated into Swedish.
14. Particulars of the business activities of the branch. The description of the business activities must be translated into Swedish. The activities of the branch must be included in the business activities of the foreign business enterprise. However, further clarification may be required for reasons relating to the Business Names Act.

Attachments to the notification to Bolagsverket

1. A certificate of registration or the equivalent showing that the foreign business enterprise has been duly established and registered. This certificate may not be older than six months
2. A copy of the current articles of association, statutes or equivalent basic document of the foreign business enterprise.
3. A copy of the accounting documents for the two most recent financial years for the foreign business enterprise and possibly the parent company.
4. A certification that the foreign business enterprise is not bankrupt. A certificate of freedom from bankruptcy can be issued by the registration authority of the foreign business enterprise. In countries where it is not possible to obtain certification from such an authority, the equivalent certificate may be obtained from a notary public, a lawyer, an authorized public accountant or the equivalent.
5. A power of attorney for the managing director of the branch (and the deputy managing director, if any). This is normally to contain the following:
   • that NN has been appointed by the foreign business enterprise as the managing director (or deputy managing director) of the branch in Sweden,
   • that NN has the right to act on behalf of the foreign business enterprise in all matters relating to business activities in Sweden and to accept process on behalf of the foreign business enterprise in all matters which relate to the operations in Sweden, and to speak and act for the business enterprise, personally or through another person,
   • place, date, signature and name in clear text.
6. The text of the power of attorney may not include any restrictions in relation to the above text. The person or persons who sign the power of attorney must be entitled to represent the foreign company and thereby have the right to issue a power of attorney of this kind. A certified copy of the power of attorney must be submitted to Bolagsverket. See an example of Power of attorney, managing director
7. If the branch reports an unauthorized split financial year as accounting period, a special permission from Skatteverket (the tax authorities) must be enclosed.
8. Certified copy of passport or other identification document for the managing director, deputy managing director of the branch, and/or signatories, when the foreign company is a banking company, if he/she is not domiciled in Sweden.
9. A copy of the license from Finansinspektionen (the Swedish financial supervisory authority) to operate banking business from a branch in Sweden, if the branch is a bank branch of a foreign credit institution outside the EEA.

Registration of changes in the branch

If any circumstance that has previously been registered changes, the managing director of the branch, (or the deputy managing director), or, when relevant, a new managing director of the branch, must immediately notify the new circumstance for registration. Please, use form Application for changes – branch, 888 e.

Deregistration

If the foreign business enterprise owning the branch enters into liquidation or is declared bankrupt, or ceases its business activities, the branch is to be deregistered. This is to be notified to Bolagsverket by the managing director (or the deputy managing director) of the branch or by a person in the foreign business enterprise who is entitled to do this. If the foreign business enterprise is declared bankrupt the notification may also be made by the trustee. If a representative for the foreign enterprise signs the notification, a certification of his/her signatory power to do so – e.g. a certificate of registration or a certification from the notary public – must be enclosed to the notification. Please, use form Application for deregistration – branch, 889 e.

Bolagsverket is also entitled to deregister the branch, if, for instance, there is no authorized managing director or no special person authorized to receive service of process (when applicable) or if the accounting documents have not been filed with Bolagsverket.

References

Finansinspektionen (the Swedish financial supervisory authority) should be consulted when establishing a business activity in Sweden, which is subject to supervision, for instance, insurance business or certain other business activities within the financial sector.

The most important legislative instruments in this area are

• The Foreign Branch Offices Act (1992:160)
• The Foreign Branch Offices Ordinance (1992:308)
• The Business Names Act (1974:156)

Nr 19 e, 1 April 2011