Market snapshot

Recent activity

How would you describe the general state of equity capital markets in your jurisdiction, including notable recent activity and deals?

Following several years of high activity, the Swedish markets saw fewer initial public offerings (IPOs) in 2018. This decrease may be in part due to the fact that many IPOs are conducted in the form of dual tracks, whereby the companies are sold privately and thus never reach the stock market. A good example of this phenomenon is Paypal’s acquisition of Izettle in May 2018, as well as the acquisition of Piab by Patricia Industries (part of Investor) in April 2018.

There has also been limited rights issues and directed share issues recently. This has also been the case for public takeovers for a number of years, although there are signs that activity is picking up in this area. As an alternative to public takeovers, a number of transactions have been carried out in the form of legal mergers. A recent example of this is the combination of Tele2 and Com Hem, which was announced in January 2018.

Recognised exchanges

What recognised exchanges operate in your jurisdiction, and what are the pros and cons of listing in each?

There are two regulated markets in Sweden, Nasdaq Stockholm and NGM Equity. Nasdaq Stockholm is larger in most respects, and a listing on Nasdaq Stockholm will normally attract the most attention from investors.

Reforms and case law

Are any regulatory reforms envisaged or underway with regard to equity capital markets? Has there been any recent case law affecting the markets?

On 20 July 2017 a new EU Prospectus Regulation (2017/1129) was adopted. The regulation will apply from 20 July 2019 (although some provisions came into force on 20 July 2017). The new regulation replaces the Prospectus Directive (2003/71/EC) in its entirety. The new regulation includes, for instance, changes with respect to prospectus summaries and risk factors sections of prospectuses, and entails an increase in the type of information that may be incorporated by reference into a prospectus.

There has not been any recent case law affecting the Swedish equity capital markets.

Tech developments

Have there been any notable recent developments in financial technology (fintech) that affect equity capital markets in your jurisdiction?

Although the development within fintech is progressing at a fast pace, no single notable development that affect the equity capital markets in Sweden has taken place in recent time.

Regulatory framework

Legislation

What primary and secondary legislation governs the issue and trade of equity securities in your jurisdiction?

Primary legislation at EU level includes the Prospectus Directive (2003/71/EC), the Prospectus Regulation (Commission Regulation 809/2004), the new Prospectus Regulation (2017/1129) (to the extent in force), the Market Abuse Regulation (596/2014), and the Market Abuse Directive (2014/57/EU). Primary legislation at national level includes the Swedish Companies Act (2005:551), the Swedish Financial Instruments Trading Act (1991:980), the Swedish Securities Market Act (2007:528), the Swedish Supplemental Provisions for the EU Market Abuse Regulation Act (2016:1306) and the Swedish Market Abuse Act (2016:1307).

As regards secondary legislation, the Swedish Financial Supervisory Authority issues regulations and guidelines reasonably frequently with respect to the financial markets and stakeholders operating on such markets.

Regulators

Which authorities regulate equity capital markets in your jurisdiction and what is the extent of their powers?

The Swedish Financial Supervisory Authority is the main regulatory authority with respect to equity capital markets in Sweden. The authority’s powers are extensive. One of its key roles is to supervise exchanges and monitor companies that operate on the Swedish financial markets. Further, the authority has delegated powers to the Swedish Securities Council with respect to matters relating to the rules governing mandatory bids. The Swedish Securities Council is a private and self-regulatory body made up of representatives of various organisations. It is a key organisation as it promotes good practices in the market through statements, advice and information.

Listing

Requirements

What eligibility and disclosure requirements apply for primary listing of equity securities on recognised exchanges in your jurisdiction (eg, aggregate share value, free float requirements, trading record, working capital)?

The listing rules of the regulated markets provide requirements with respect to eligibility and documents to be provided by issuers. Principle eligibility requirements for admission of shares for trading on the Swedish regulated markets include the following:

  • The issuer must be duly incorporated or otherwise validly established according to the relevant laws of its place of incorporation or establishment.
  • The securities of the issuer must conform with the laws of the issuer’s place of incorporation and have the necessary statutory or other consents.
  • The securities must be freely negotiable.
  • The application for admission to trading must cover the entire class of shares.
  • The issuer shall demonstrate that it possesses documented earnings capacity on a business group level or, alternatively, an issuer that does not possess documented earnings capacity shall demonstrate that it has sufficient working capital available for its planned business for at least 12 months after the first day of trading. Further, it follows from the Prospectus Regulation (Commission Regulation 809/2004) that the prospectus prepared by the issuer must include a declaration that:
    • the working capital is sufficient for the issuer’s current needs during the subsequent 12-month period; or
    • information about the issuer’s plan for obtaining the necessary additional working capital.
  • Conditions for sufficient demand and supply shall exist.
  • A sufficient number of securities shall be held in public hands (25% with respect to Nasdaq Stockholm and 10% with respect to NGM Equity). In addition, the issuer shall have a sufficient number of shareholders.
  • The board of directors of the issuer shall be made up of individuals who collectively offer the range of competence and experience required to govern and control a listed company.
  • The management of the issuer shall have sufficient competence and experience to manage a listed company.
  • The issuer shall be subject to a legal due diligence.
  • In accordance with the Prospectus Regulation and the Swedish Financial Instruments Trading Act (1991:980), a prospectus shall be prepared in connection with an application for admission to trading on a regulated market.

Exemptions

Are there any exemptions from the listing requirements?

Yes, with respect to Nasdaq Stockholm, the applicable listing rules contain a general exemption: Nasdaq Stockholm may approve an application for admission to trading even if all the listing requirements have not been fulfilled, provided that the circumstances considered together give a sufficient assurance that the situation of the issuer and its financial instruments is in compliance with the objectives of facilitating sufficient liquidity and promoting confidence in the issuer in question, Nasdaq Stockholm, and the stock market at large. The listing rules applicable on NGM Equity contain a similar exemption, whereby the exchange may approve an application for trading notwithstanding the fact that the issuer fails to satisfy all listing requirements, provided that the purpose of the relevant listing requirement or any other rule is not jeopardised, or the purpose of the listing requirement can be satisfied in some other manner.  

Procedure and timeframe

What is the procedure and typical timeframe for listing?

It typically takes four to six months between the initiation of a listing procedure and the consummation thereof; however, the timeline depends to some extent on the choice of marketplace on which the shares of the issuer are to be listed. Nasdaq Stockholm provides a fast-track alternative for companies that are very well prepared. The fast-track process should take five weeks in total.

When a listing process is initiated, the issuer usually begins the process by retaining a number of advisers, including, for instance, financial and legal advisers and auditors. The preparatory phase of a listing process on a regulated market will include contacts with the relevant stock exchange, which will assess whether it would be appropriate to list and admit the securities in question to trading. In addition, in many cases (regardless of the choice of marketplace) a separate auditor conducts a pre-audit.

Further, the preparatory stage of a listing process will include the carrying out of due diligence exercises (legal, financial, business and tax). The legal due diligence is mandatory with respect to companies looking to get their shares admitted to trading on a regulated market. The nature of the review is somewhat more limited in comparison to a due diligence performed in connection with a private M&A transaction. The preparatory phase of a listing process also includes prospectus drafting.

When the prospectus is more or less finalised, it is to be submitted to the Swedish Financial Supervisory Authority for review and approval. Provided that the issuer’s securities have not previously been offered to the public or been admitted to trading on a regulated market, the authority shall, pursuant to the Swedish Financial Instruments Trading Act (1991:980), decide upon approval of the prospectus within 20 business days of the submission of the application.  

The issuer is also required to submit a formal application for admission to trading or listing to the relevant exchange, the approval of which may be subject to several conditions, such as the prospectus being approved by the Swedish Financial Supervisory Authority and the issuer fulfilling the applicable free float requirements.

Fees

What fees apply for an application to list equity securities?

The normal listing fees for issuers on Nasdaq Stockholm are currently made up of a fixed fee and a variable fee. The fixed fee amounts to Skr700,000 and shall be paid before the exchange initiates its processing of the listing application. The variable fee shall be paid after completion of the listing and is based on the average market capitalisation for the first month of trading. The fee is currently set at Skr50 per market capitalisation million. The aggregate application fee is presently capped at Skr1.2 million. (In the event a company cancels the listing process, an administrative fee of Skr300,000 will be invoiced.) The issuer will also need to pay other fees to the exchange, such as a fee of Skr150,000 for a one-year exchange auditor follow-up review and an annual fee of Skr48 per market capitalisation million, based on the average market capitalisation for the previous year (the annual fee will, however, amount to a minimum of Skr205,000 and a maximum of Skr3.105 million).

With respect to NGM Equity, the listing fee consists of a fixed fee and a monthly fee to be paid on a continual basis. The fixed fee amounts to Skr700,000 and shall be paid before the exchange initiates its processing of the listing application. The fixed fee will not be repaid in the event the issuer cancels the listing process. The subsequent monthly fee amounts to Skr12,000 and the issuer will be charged for a minimum of 12 months, regardless of whether the shares of the issuer are listed for a shorter period of time.

Issuers are also subject to other costs in connection with an application to list its equity securities, such as a fixed fee relating to the Swedish Financial Supervisory Authority’s review and approval process with respect to the prospectus.

Listing versus admission to trading

Is there a distinction between listing and admission to trading in your jurisdiction?

Yes, there is a distinction between listing and admission to trading in Sweden. An issuer’s shares may be admitted to trading on a regulated market, whereas an issuer’s shares may be listed on multilateral trading facilities, which are not regulated markets for EU directive purposes and thus subject to a lower level of regulation.

Secondary listing

Are there any differences in the rules, restrictions and procedures for secondary listings of equity securities?

Nasdaq Stockholm recently abolished the concept of secondary listings. However, issuers that have been admitted to trading on a regulated market or equivalent run by Nasdaq, Deutsche Börse, London Stock Exchange, NYSE, Euronext, Oslo Börs, Hong Kong Exchanges and Clearing, Australian Securities Exchange, Singapore Exchange, Borsa Istanbul or Toronto Stock Exchange, for a time period of normally more than 12 months, will, upon request, normally be granted a simplified listing process entailing a waiver from the requirement of having an exchange auditor reviewing the issuer in order to determine whether it satisfies all the applicable requirements. Nasdaq Stockholm will in such case normally require a certificate from the regulated market where the issuer is listed. This is done to verify that the issuer, in essential respects, has complied with the listing requirements of such market.

NGM Equity allows for secondary listings to be carried out and may in such cases grant exemptions from one or more of its listing requirements. However, issuers applying for a secondary listing on NGM Equity must at least display that conditions for fair, orderly and efficient trading in their shares will exist. Other than that, the exchange normally relies on the listing requirements of the regulated market on which such company is already listed.

Foreign issuers

Are there any differences in the listing rules and procedures for foreign issuers?

In general there are no such differences. However, there are some exceptions for companies whose shares are already admitted to trading on regulated markets in foreign countries. With respect to Nasdaq Stockholm, an issuer will, upon request, normally be granted a simplified listing process if that issuer has been admitted to trading on a regulated market, or equivalent:

  • run by Nasdaq, Deutsche Börse, London Stock Exchange, NYSE, Euronext, Oslo Börs, Hong Kong Exchanges and Clearing, Australian Securities Exchange, Singapore Exchange, Borsa Istanbul or Toronto Stock Exchange; and
  • for a time period of normally more than 12 months.

The simplified listing process entails a waiver from the requirement of having an exchange auditor reviewing the issuer in order to determine whether it satisfies all the applicable requirements.

Nasdaq Stockholm will instead typically require a certificate from the regulated market where the issuer is listed. This is done to verify that the issuer, in essential respects, has complied with the listing requirements.

NGM Equity allows for secondary listings to be carried out and may in such cases grant exemptions from one or more of its listing requirements. However, companies applying for a secondary listing on NGM Equity must at least display that conditions for fair, orderly and efficient trading in their shares will exist. Other than that, the exchange normally relies on the listing requirements of the regulated market on which such company is already listed.

A foreign issuer the shares of which are admitted to trading on a regulated market will, in order to comply with good stock market practice, be required to apply the Swedish Corporate Governance Code (and thus comply with the code or explain any non-compliance thereof) or the corporate governance code in force in the country where the issuer has its registered office or the code applicable in the country in which its shares are also listed. If the foreign issuer does not apply the code, it shall state which corporate governance code or corporate governance rules it applies and its reasons for doing so. It shall also report and explain the important aspects in which the issuer’s conduct deviates from the code. Such explanation shall be provided in or adjacent to the issuer’s corporate governance report or, if no such report exists, on the issuer’s website.

Delisting

Under what circumstances can a company be delisted? What rules and procedures apply?

An issuer may request that its financial instruments be delisted. The relevant Swedish regulated marketplace will approve such request and its decision becomes effective at such time as is agreed between the exchange and the issuer. Generally, the regulated markets require four weeks’ notice for the issuer to be delisted, but if there is extensive trading and a large number of shareholders or, with respect to NGM Equity, there exists any other significant reason, the relevant marketplace may decide to postpone the delisting for a period of up to six months. In case of a takeover offer, the regulated market in question can accept two weeks’ notice for delisting, if the offeror holds 90% or more of the financial instruments in the issuer, the trading is sporadic and the offeror has announced its intention to initiate proceedings in respect of compulsory redemption. The regulated marketplace will make an assessment of an appropriate delisting date on a case-by-case basis.

 The regulated marketplaces may decide to compulsorily delist the financial instruments of the issuer in circumstances where:

  • an application for bankruptcy, winding-up or equivalent motion has been filed by the issuer or a third party to a court or other public authority;
  • the issuer does not fulfil all listing requirements, assuming that:
    • the issuer has not remedied the situation within a time decided by the exchange – although in normal circumstances not longer than six months;
    • there are no other available means to remedy the situation and restore the situation; and
    • the non-fulfilment is deemed to be significant);
  • the issuer has failed to pay any listing fee when due, and with respect to NGM Equity only; or
  • the issuer undergoes such significant changes that it can be considered a different company, and the issuer refuses to go through a new listing process.

Any decision to delist the shares of an issuer from Nasdaq Stockholm due to the issuer not fulfilling the listing requirements is made by Nasdaq Stockholm’s disciplinary committee. With respect to NGM Equity, such decisions are taken by NGM Equity’s listing committee.

Initial public offerings

Structure

What are the most common structures used for IPOs in your jurisdiction, and what are the advantages and disadvantages of each?

Most initial public offerings (IPOs) are carried out through a bookbuilding process, where the share price may be either fixed or within a price range. Further, the shares may be newly issued, already existing, or a mixture of the two. The advantage of using a bookbuilding process is that it reveals the relevant demand in the shares at a certain price level. This can be used as a basis for the allocation of shares and bookbuilding is therefore often a prerequisite for a functioning aftermarket. 

Procedure and timeframe

What is the procedure and typical timeframe for launching an IPO?

It typically takes four to six months between the initiation of an IPO procedure and the consummation thereof. The timeline is, however, to some extent dependent upon the choice of marketplace on which the shares of the issuer are to be listed. Nasdaq Stockholm provides a fast-track alternative for companies that are very well prepared. Such fast-track process typically takes five weeks in total.

When an IPO process is initiated, the issuer usually begins the process by retaining a number of advisers, including, for instance, financial and legal advisers, auditors, and public relations advisers. The issuer typically signs engagement letters with the advisers.

The preparatory phase of an IPO on a regulated market will include contacts with the relevant stock exchange, which will appoint an exchange auditor for the purpose of assessing whether it would be appropriate to list and admit the securities in question to trading. In addition, in many cases (regardless of the choice of marketplace) a pre-audit is performed by a separate auditor.

Further, the preparatory stage of an IPO will include the carrying out of due diligence exercises (legal, financial, business and tax). The legal and tax due diligence is mandatory with respect to companies looking to get their shares admitted to trading on a regulated market. The nature of the review is somewhat more limited than a due diligence performed in connection with a private M&A transaction.

The preparatory phase of an IPO also includes, for instance, prospectus drafting and preparation of other transaction documents (eg, research guidelines, publicity guidelines, placing agreement and lock-up undertakings).

When the prospectus is more or less finalised, it is to be submitted to the Swedish Financial Supervisory Authority for review and approval. Provided that the issuer’s securities have not previously been offered to the public or been admitted to trading on a regulated market, the authority shall, pursuant to the Swedish Financial Instruments Trading Act (1991:980), decide upon approval of the prospectus within 20 business days of the submission of the application.  

An IPO process will also involve analyst education and pre-marketing activities primarily involving the issuer and the financial advisers appointed. Such activities include, for instance, analyst presentations, Q&A sessions, early-look investor meetings, pilot fishing and roadshows. Further, research reports will be prepared by the research analysts involved. The management of the issuer is normally expected to comment on drafts of such reports.

The issuer is also required to submit a formal application for admission to trading or listing to the relevant marketplace, the approval of which may be subject to several conditions, such as the prospectus being approved by the Swedish Financial Supervisory Authority and the issuer fulfilling the applicable free float requirements (which, however, normally cannot be determined prior to the allocation of shares).

Once the issuer feels confident that it will proceed with the IPO, the issuer often publishes an intention to float announcement (ITF). At this time, the research reports prepared by the involved research analysts will typically be published.

At quite an early stage in the IPO process, the issuer’s financial advisers usually provide an indicative valuation of the issuer. At a later point in time, before the commencement of the application period, a price range or a fixed price will be determined.

The application period may not begin prior to the prospectus being approved by the Swedish Financial Supervisory Authority and published. Thus, the application period is typically initiated when the IPO is publicly launched – that is, when the prospectus is made public together with a press release containing, for instance, the price range, or a fixed fee, and size of the offer. The application period is often a couple of weeks.

The decision on the IPO price (if a price range is used), allocation and signing of the placing agreement (and lock-up undertakings) normally occur the day before the first day of trading. Then, on the first day of trading, pricing is announced through a press release. During the period from the first day of trading until the settlement date (typically two business days), trading in the issuer’s shares is normally made possible through share loans from main shareholders. At the settlement date, trading becomes unconditional, meaning that the investors become the legal owners of the shares in question.

Due diligence

What due diligence is required and advised in the IPO process?

Generally, the preparatory stage of an IPO will include the carrying out of legal, financial, business and tax due diligence exercises. The legal and tax due diligence is mandatory with respect to companies looking to get their shares admitted to trading on a regulated market. However, the nature of the legal review is somewhat more limited than a due diligence performed in connection with a private M&A transaction.

Pricing and allocation

What rules and standards govern share pricing and allocation in the context of an IPO?

The Swedish Securities Dealers Association, a self-regulatory body, issues rules that are applicable in the context of listing of shares. The association is currently reviewing its rules regarding share allocation but has currently no applicable rules in this respect.

The Prospectus Regulation (Commission Regulation 809/2004) contains rules regarding both share pricing and allocation of shares. The prospectus is to contain information regarding, among other things, how the different tranches of the issue are allocated between institutional investors, non-professional investors, employees within the company and possible other tranches.

Follow-on offerings

Types/pros and cons

What types of follow-on offering are commonly used in your jurisdiction, and what are the advantages and disadvantages of each?

Follow-on offerings are not commonly used in Sweden.

Prospectus requirements

Applicability and exemptions

When must a prospectus be filed? Are there any notable exemptions?

There are two situations where a prospectus must be filed: where transferable securities are offered to the general public and where such securities are admitted to trading on a regulated market.

There are a few exemptions pursuant to which a prospectus does not have to be prepared, of which the most relevant ones are:

  • where the offering is directed solely towards qualified investors (the definition of which is set out in the Swedish Financial Instruments Trading Act (1991:980) and the Swedish Securities Market Act (2007:528));
  • where an offering is made to fewer than 150 persons (other than qualified investors) per European Economic Area state;
  • where an offering amounts to at least €100,000 per investor or where the nominal value of the securities offered amounts to at least €100,000;
  • where the aggregate amount to be paid for the securities relating to an offering corresponds to a maximum of €2.5 million over 12 months; and
  • where the number of new shares offered amounts to less than 10% of the number of shares of the same class that is already admitted to trading on the relevant regulated market.

Content

What must the prospectus contain?

In general terms, a prospectus must contain all the information that is necessary for an investor to be able to make an informed assessment of the issuer and the transferable securities that are being offered or admitted to trading. Detailed requirements are set out in the Prospectus Regulation (Commission Regulation 809/2004) and the Swedish Financial Instruments Trading Act.

Filing and approval procedure

What is the procedure for filing for and obtaining prospectus approval from the regulator? Can draft prospectuses be submitted to the regulator for preliminary comment?

The procedure relating to the filing for and obtaining of prospectus approval is typically initiated by the submission of an application for prospectus approval to the Swedish Financial Supervisory Authority. The application shall include the prospectus, the authority’s checklists (which correspond to the annexes to the Prospectus Regulation), and the relevant application form. The Swedish Financial Instruments Trading Act provides that a decision by the authority generally must be taken within 10 business days of receiving a complete application. However, with respect to issuers that have not previously offered shares to the public or been admitted to trading on a regulated market, the processing time is 20 business days. The authority must release its decision and a potential request for additional information as soon as possible, and, in any case, no later than 10 business days after the date of the submission of the application. The processing time may be delayed if the issuer makes amendments to the prospectus, if such changes have not been requested by the authority. Once the prospectus has been approved by the authority, no amendments may be made. Subsequent to the obtaining of the approval, the prospectus must be made public (eg, on the issuer’s webpage).

It is possible to submit draft prospectuses to the Swedish Financial Supervisory Authority for preliminary comments.

Prospectus liability

What types of prospectus liability can arise (eg, statutory, contractual, tort)? Which parties may be held liable?

Under the Swedish Companies Act (2005:551), a founder, director, managing director or auditor of a company who, in performing his or her duties, intentionally or negligently causes damage to the company, must pay compensation for that damage. If a company has prepared a prospectus in accordance with the Swedish Financial Instruments Trading Act, the same applies to damage resulting from contravention of the prospectus rules of said act or of the Prospectus Regulation.

There is uncertainty as to whether under Swedish law the issuer can be held liable to pay damages to investors due to untrue statements or omissions in the prospectus.

What defences are available for liable parties?

Customary procedural defences are available in relation to proceedings regarding prospectus liability.

Marketing

Methods

What methods are commonly used to market equity security offerings in your jurisdiction?

In Sweden, equity security offerings are mainly marketed through the prospectus. In addition, research reports prepared by the financial advisers of the issuer are normally sent to professional investors and press releases are distributed. Furthermore, the issuer (through PR advisers) often strives to publish one or several articles regarding an offering in the relevant financial newspapers.

Rules and restrictions

What rules and restrictions (if any) apply to the marketing of equity securities?

Swedish law does not specifically regulate the topic of communication with the press, or other general publicity or communication with securities analysts or investors prior to and during an initial public offering (IPO). Such publicity or communication is generally permissible. Since it is important that all information of significance about the issuer be included in the prospectus and not disseminated to the market in any other manner, due care and monitoring of the dissemination of information is required. Pursuant to the Swedish Financial Instruments Trading Act (1991:980), any advertisements about the IPO must include a statement that a prospectus has been published or will be published, and information on how to get hold of it. The advertisement must be presented in such a way that it cannot be mistaken for something other than an advertisement. The information provided in the advertisement may not be incorrect or misleading, and must also be consistent with the information provided in the prospectus; if a prospectus has not yet been published, such information must be consistent with the information to be provided in the prospectus. Other information provided by an issuer in relation to an IPO (reports and the like) must be consistent with the information provided in the prospectus.

Bookbuilding

To what extent is bookbuilding used in your jurisdiction, and how does the process customarily play out? What are the advantages and disadvantages of using this process?

Bookbuilding is commonly used in Sweden. The process is normally initiated by the publishing of an intention to float announcement, followed by a formal IPO release. After the IPO release the bookbuilding commences and, simultaneously, the application period for the general public is commenced. Following the bookbuilding period, pricing and allocation occurs and trading in the shares begins the following day. However, such trading is conditional until the settlement date, which normally occurs two business days after the first day of trading.

The most prominent advantage of using a bookbuilding process is that it enables determination of the relevant demand in the shares at a certain price level. This can be used as a basis for the allocation of shares and, consequently, bookbuilding is more or less a prerequisite for a functioning aftermarket. 

Role of advisers

Adviser roles and responsibilities

Describe the role and responsibilities of the following advisers in the context of equity securities offerings, including how their relationship with the issuer is formalised (eg, through terms of agreements):

(a) Banks/underwriters?

Participating banks have the overall responsibility for the process. Further, such banks coordinate all participating parties and advisers. The banks themselves participate in the preparation of the prospectus, for instance, and are responsible for contacts with investors with respect to the sale of shares, as well as the preparation of research reports. Normally, banks are also responsible for underwriting the offering.

(b) Auditors?

Auditors usually conduct a pre-audit and contribute in the preparation of the prospectus. Further, auditors review the financial information of the prospectus from a comfort perspective and provide comfort letters based on such review.

(c) Lawyers?

Lawyers carry out the due diligence exercise and are normally in charge of the prospectus drafting. Lawyers are also responsible for all other legal matters related to both the company and the offering – for instance, the preparation of a placing agreement, lock-up undertakings and necessary corporate actions.

(d) Any other relevant advisers?

Public relations advisers are often engaged in the process and mainly contribute to the marketing of the IPO in question.

With respect to all of the above advisers, the relationship between the issuer and the adviser is normally formalised through an engagement letter.

Continuing obligations

Continuing obligations

What continuing obligations apply to issuers of equity securities? What are the penalties for non-compliance?

There are a number of continuing obligations applicable to issuers of equity securities in Sweden, set out in, among others, the relevant listing rules, the Market Abuse Regulation (596/2014), the Swedish Financial Instruments Trading Act (1991:980) and the Swedish Securities Market Act (2007:528). The most fundamental obligation is perhaps the information obligation applicable to listed companies. Further, the Market Abuse Regulation stipulates obligations related to insider issues.

Potential penalties for non-compliance with the continuing obligations include public and/or criminal sanctions. For example, the Swedish Financial Supervisory Authority may, in the event of a breach of the information obligation:

  • issue critical remarks;
  • demand that the issuer take or refrain from certain actions;
  • prohibit the responsible persons from being board members or managing directors of financial institutions or from trading with certain securities; and/or
  • impose a sanction fee.

In accordance with the relevant listing rules, the exchanges may, in the event of a breach of the applicable listing rules, sanction an issuer and may impose a fine of up to 15 times the annual fee paid by the issuer to the exchange with respect to Nasdaq Stockholm, and up to Skr2 million with respect to NGM Equity. The exchanges may also, where the issuer does not comply with the applicable listing requirements, decide to delist the issuer.

Market abuse provisions

Rules and restrictions

What rules and restrictions are in place to combat market abuse and insider trading? What are the penalties for breach of these rules?

The Market Abuse Regulation is supplemented in Sweden by the Swedish Supplemental Provisions for the EU Market Abuse Regulation Act (2016:1306) and the Swedish Market Abuse Act (2016:1307). In the event of a breach of the Market Abuse Regulation, criminal sanctions (fines, as well as imprisonment) may be imposed. Moreover, the Swedish Financial Supervisory Authority may take administrative measures, such as the imposition of a sanction fee.

Tax liabilities

Applicable taxes

What tax liabilities arise in relation to the issue and trade of equity securities in your jurisdiction?

In Sweden, the issue of equity securities will not result in any stamp duty or similar tax being levied. With respect to trading of equity securities, no stamp duty or similar tax will be levied. However, capital gains tax will be levied, depending on, among other things, the type of the account through which the securities in question are held.

Mitigation

How can these tax liabilities be mitigated?

With respect to capital gains tax, it is normally advantageous to use an investment savings account. Flat-rate taxation applies in relation to investment savings accounts, entailing that a certain percentage is paid in taxes every year based on the value of the account instead of on the gains made, as is the case for regular securities deposits.