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Proposal for Lower capital requirement for private limited companies

The Swedish government recently presented a proposal to reduce the minimum permitted share capital in private limited companies from SEK 50,000 to SEK 25,000, effective January 1, 2020.


Share capital requirements of a certain minimum size should ensure that, at least from an accounting perspective, there is a margin between the company’s assets and liabilities. There are several rules in the Swedish Companies Act that aim to ensure that this margin does not decrease by e.g., shareholder dividends. At the same time, the proposal points out that the minimum requirement is, in practice, a weak protection for the creditors, and that the share capital should rather work as a barrier against dishonest businesses. (source)


08.11.19


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