According to Chapter 25 of the Companies Act (2005:551), shareholders and representatives of limited liability companies may be jointly liable for the companies' debts if certain requirements are not met. For instance, if there is reason to believe that the total amount of equity falls below half of the registered share capital amount, a fixed liability period arises for the representatives and shareholders (subject to knowledge). During this period, a balance sheet for liquidation purposes must be prepared in order to avoid personal liability. Further, the balance sheet must be reviewed by the company's auditor. Finally, two control shareholder meetings must be conducted in order to decide whether the company should enter into liquidation.
In a recent case, a printing office filed a lawsuit against a woman who was jointly liable for a company's obligations, as she acted both as company shareholder and deputy director. Moreover, she had been an authorised company signatory. The printing office argued that the company had entered into a purchase agreement with the deputy director's knowledge, even though the total amount of equity had been reduced to less than half of the registered share capital and no balance sheet for liquidation purposes had been prepared. Hence, the obligations set forth in the act were not fulfilled and the company, which subsequently went bankrupt, could not fulfil its contractual promises in relation to the printing office.
However, the district court held that the printing office had lost its right to file a lawsuit in this regard because the claim was time barred. According to the Limitations Act (SFS 1981:130), a claim is time barred 10 years after its creation unless the limitation period is interrupted before that time. In this case, 10 years had elapsed and no valid interruption had been made. Further, the court held that personal liability for the shareholders and representatives is identical to and accessory with the liability of the company. This means that the obligations of the company lapsed due to a time bar, the same also applied to the jointly responsible person. The Court of Appeal(1) affirmed the district court's decision. The claim was therefore time barred and the deputy director was not liable for the company's debts.
With regard to limitation of joint liability, Section 20a has been added to Chapter 25 of the Companies Act. According to this new provision, joint liability shall be terminated three years after the "date on which the obligation to which the liability pertains was incurred, or within one year from the final date on which the obligation should have been fulfilled".(2) Thus, the Limitations Act (with its 10-year provision) shall not apply in such cases.
For further information on this topic please contact Jon Petterson or Petar Bojovic at Advokatfirman Törngren Magnell KB by telephone (+46 8 400 283 00) or email (firstname.lastname@example.org or email@example.com). Törngren Magnell's website can be accessed at www.torngrenmagnell.com.
(2) However, this is not applicable to the liability under recourse obligations, which may arise due to the fact that a party with joint liability pays more than its share of an obligation for which a number of parties have joint liability. In such cases, the Limitations Act's 10-year provision applies.
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