Key Initial Planning Considerations
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Key Initial Planning Considerations
Generally speaking, assuming a straightforward process how long does it take to pay a dividend?

A reasonable time period for paying a dividend is two weeks.

Any timing restrictions on paying dividends?

No, there are no timing restrictions on paying dividends.

Dividends may be paid against freely distributable reserves of the company as reflected in the latest statutory annual accounts approved by the Shareholder(s).

It is not possible to distribute current year profits through interim dividends provided (see below). 

What accounts will be required to support payment of dividend and will these need to be audited?

Dividends must be based on the latest adopted statutory annual accounts. Annual accounts are generally subject to audit unless the company is exempt. Dividends are often resolved at the annual meeting of shareholders. Dividends may also be resolved and paid at other times than at the annual meeting, but the permissibility is still based on the latest adopted accounts, also taking into account any dividends or other value transfers after the balance date. As noted above, current year profits that are not yet reflected in adopted annual accounts may not be paid out as (interim) dividends.

Are there restrictions on the amount of dividends that can be paid?

The basic requirement is that following the dividend, there must be sufficient coverage for the restricted capital according to the latest adopted annual accounts, also taking into account any dividends or other value transfers after the balance date. The amount must also otherwise be justifiable, taking into account factors such as the company's consolidation and liquidity needs under the "prudence principle".

Are there any ways to increase reserves, and if so, how long do these generally take?

Yes, it may be possible to increase reserves by reduction of the share capital or other restricted equity.

Are foreign investment or other regulatory approvals required on payment of a dividend?

No regulatory approvals are required in connection with payment of a dividend.

Are there any foreign exchange requirements on paying dividends to foreign parent companies?

No, there are no foreign exchange requirements on paying dividends to foreign parent companies.

Can cash be borrowed to settle a dividend?

Yes, there are no restrictions from a corporate law perspective on borrowing cash to settle a dividend.

Are dividends in kind possible?

Yes, dividends in kind are possible.

Are there any other general considerations with a significant timing impact on payment of dividends?

Yes. An auditor statement should be obtained to support the board's assessment that the dividend is justifiable. This requirement may be waived with all shareholders' consent, but is generally recommended in order to protect the board from liability. The statement can generally be obtained within 2-3 days provided the auditor has been briefed in advance.

Are there any restrictions on lending funds intra-group but cross border?

Yes, there are certain restrictions from a corporate law perspective on lending funds intra-group but cross-border. Under the financial assistance rules of the Swedish Companies Act, a Swedish AB may not provide monetary loans, or security for monetary loans, to (among others) a person or legal entity holding shares in the company or in a company in the same company group, unless an exemption applies. For purposes of this general loan prohibition, a company group is defined as a group of companies in which the parent company is a Swedish AB. There are exemptions, for example for loans within a group where the parent company is domiciled in the EEA and comparable to a Swedish limited liability company and its subsidiaries, and for certain commercially motivated loans.