Before a Public Takeover Bid | Sweden | Global Public M&A Guide

3. Before a Public Takeover Bid

[Last updated: 1 January 2025, unless otherwise noted]

3.1 Shareholding rights and powers

Swedish law provides for multiple classes of shares with different voting rights. One class of shares may represent up to 10 times the voting rights of another class. Consequently, the number of shares does not always correspond to the voting power.

The table below provides an overview of the different rights and powers that are attached to different levels of shareholding within a Swedish listed entity:

Shareholding	Rights
One share	The right to attend and vote at general shareholders' meetings. The right to introduce additional items on the agenda of a general shareholders' meeting and to table draft resolutions for items on the agenda, by request to the board of directors prior to the issuance of the notice of a meeting. The right to obtain a copy of the documentation submitted to general shareholders' meetings. The right to submit questions to the directors and statutory auditors at general shareholders' meetings (orally at the meeting). The right to request the nullity of decisions of general shareholders' meetings for irregularities as to form, process, or other reasons (as provided for in Ch. 7 Sections 50-51 of the Swedish Companies Act). In case of a merger or de-merger, the right to file a liability claim against directors or to request the nullity of the merger or de-merger.
5% of the shares or the votes	Significant holding level which, provided that the company is listed on a regulated market, requires the holder to notify the listed company and the SFSA. Changes in major shareholdings must be notified when a shareholder passes the following holding thresholds: 5%, 10%, 15%, 20%, 25%, 30%, 50%, 66 ⅔% and 90% of the total number of shares or votes in the company.
10% of the shares	The right to request the board of directors to convene a general shareholders' meeting. The right to request the Swedish Companies Registration Office (Bolagsverket) to appoint a special expert to check the company's books, financial records and acts of the company's corporate bodies, or to appoint a minority auditor who will take part in the statutory audit. The right to file derivative action against the directors on behalf of the company. The right to block a decision to discharge the directors and managing director from liability. The right to block decisions which require more than 90% majority according to the Companies Act. The right to request redemption of minority shares.
30% of the votes	Significant holding level which requires the holder, once the level is reached, to announce the magnitude of the shareholding and, within four weeks, place a mandatory bid offer regarding the remaining outstanding shares.
More than 33% of the votes (at a general shareholders' meeting)	The ability at a general shareholders’ meeting to block any changes to the articles of association.
More than 50% of the votes (at a general shareholders’ meeting)	The ability at a general shareholders’ meeting to, amongst other things: appoint and dismiss directors and approve the remuneration and, as relevant, severance package of directors; approve certain aspects of the remuneration and severance package of executive management; appoint and dismiss statutory auditors and approve their remuneration; and approve the annual financial statements (including the remuneration report of the remuneration committee of the board of directors).
More than 66 ⅔% of the votes	The ability to ensure that certain special resolutions are passed, e.g., directed share issues.
More than 90% of the shares	The possibility to force all other shareholders to sell their shares through a public bid (a "squeeze-out").

3.2 Restrictions and careful planning

Swedish law contains a number of rules that already apply before a public takeover bid is announced. These rules impose restrictions and hurdles in relation to prior stake building by a bidder, announcements of a potential takeover bid by a bidder or a target company, and prior due diligence by a potential offeror. The main restrictions and hurdles have been summarized below. Some careful planning is therefore necessary if a potential offeror or target company intends to initiate a process that is to lead towards a public takeover bid.

3.3 Insider dealing and market abuse

Before, during and after a takeover bid, the normal rules regarding insider dealing and market abuse according to MAR are applicable. For further information on the rules on insider dealing and market abuse, see 6.3 below. The rules include, amongst other things, a prohibition on the manipulation of the target's stock price, for example by creating misleading rumors. In addition, the rules prohibiting insider trading prevent an offeror that has inside information regarding a target company (other than such information received in relation to the actual takeover bid) from trading in the target company's securities.

3.4 Disclosure of shareholdings

The rules relating to the disclosure of changes in major shareholdings in listed companies on a regulated market ("Transparency Rules") are contained in the Trading Act. These rules are based on Directive 2004/109/EC of the European Parliament and of the Council of 15 December 2004, on the harmonization of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market and amending Directive 2001/34/EC, with Directive 2013/50/EU amending the Transparency Directive.

The rules regarding the disclosure of changes in major shareholdings and transparency apply before, during and after a public takeover bid.

Pursuant to these rules, if a potential offeror starts building up a stake in the target company, it will be obliged to announce its stake if the voting rights attached thereto have passed an applicable disclosure threshold. As stated above, the relevant disclosure thresholds are 5%, multiples of 5% up to 30%, and 50%, 66% (⅔) and 90% thereafter.

When determining whether a threshold has been passed, a potential bidder must also take into account the voting securities held by the parties with whom it acts in concert or may be deemed to act in concert (see 3.9 below). These include affiliates. The parties could also include existing shareholders of the target company with whom the potential bidder has entered into specific arrangements, such as call option agreements or voting agreements.

3.5 Disclosures by the target company

The target company must continue to comply with the general rules regarding disclosure and transparency.

These rules include that a company must immediately publicly disclose all inside information, subject to exemptions contained in Article 17 of the MAR. For further information on inside information, see 6.1 below. The facts surrounding the preparation of a public takeover bid would normally constitute inside information. If so, the target company may be obliged to announce this. However, the board of the target company can delay the public disclosure for a limited period of time if it believes that a disclosure would not be in the legitimate interest of the company. For instance, legitimate interest could be the case if the target's board believes that an early disclosure would prejudice the negotiation of a bid. A delay of the public disclosure, however, is only permitted provided that the non-disclosure does not entail the risk of the public being misled, and that the company can keep the relevant information confidential.

3.6 Announcements of a public takeover bid

An offeror that intends to make a public takeover bid must first undertake to comply with the Takeover Act and the Takeover Code by a notification to the regulated market on which the target company's shares are admitted to trading. After the notification, the offeror may announce the bid. Prior to announcing the bid, any uncertainty regarding the interpretation of a provision in the Takeover Code in a specific case should be eliminated by submitting an enquiry to the SSC.

As a takeover bid announcement will normally have an effect on the price of the target's shares, it must, as far as possible, contain all the facts that are relevant to making a proper assessment of the share price.

Within four weeks from the announcement, the bidder must file an offer document with the SFSA. The SFSA must scrutinize and provide comments on the offer document within 10 business days. The offer document is normally approved by the SFSA a few days after the offer document has been revised in accordance with any comments received from the SFSA. As soon as the approved offer document is published, the acceptance period can start.

If there are rumors or leaks that a potential offeror intends to launch a public takeover bid, the SSC could force an announcement. This could lead to an early disclosure and possibly an acceleration of the preparations by an offeror, as the bidder could be forced to make an announcement as to the offeror's intentions.

3.7 Early disclosure

If an offeror has been compelled by the SSC to make an early disclosure, the SSC may decide that a bid must be announced within a certain period of time or that the offeror must otherwise refrain from making a bid.

3.8 Due diligence

The Swedish public takeover bid rules contain general rules about a pre-offer due diligence. If the offeror requests that it be permitted to conduct a due diligence on the target company, the board of the target company is to decide whether the company can and will participate in such an investigation and, if so, on what conditions and to what extent. The board is to limit the investigation to factors necessary for submitting and implementing the bid. Having said this, the concept of a prior due diligence or pre-acquisition review by an offeror is generally accepted and appropriate mechanisms have been developed in practice to organize a due diligence or pre-acquisition review and to cope with potential market abuse and early disclosure concerns. These mechanisms include the use of strict confidentiality procedures, a limitation on sharing information and data rooms. Inside information is often specifically excluded from information shared since there is an obligation to disclose such shared information (see also 6.2).

As indicated above, there is no obligation for the target board to allow a due diligence process and it is up to the board to decide whether or not a due diligence is appropriate in the individual case. It is unlikely that a reasonable refusal from the board to allow a due diligence could lead to the target board being held liable for damages on any ground. The target board must determine to what extent a request for due diligence should be met, taking into consideration the commercial interest of the target and its shareholders, and keeping in mind the principle that all shareholders must receive equal treatment, for example, disclosure of inside information. Thus, the target board must assess whether or not the offeror is serious and if the terms of the takeover bid are sufficiently favorable to justify a due diligence.

3.9 Acting in concert

For the purposes of the Swedish takeover bid rules, persons are “acting in concert":

if they collaborate with the offeror, the target company or with any other person on the basis of an express or silent, oral or written, agreement aimed at acquiring control over the target company, facilitating the implementation of a takeover bid or maintaining control over the target company;
if they have entered into an agreement relating to the exercise in concert of their voting rights with a view to having a lasting common policy vis-à-vis the target company.

Persons that are affiliates of each other are deemed to act in concert or to have entered into an agreement to act in concert.

In view of the above rules and criteria, the target company could be one of the persons with whom a shareholder acts in concert or is deemed to act in concert. This is the case, for example, when a target company is already controlled by a shareholder.

The concept of persons acting in concert is very broad and, in practice, many issues can arise to determine whether persons act or do not act in concert. This is especially relevant in relation to mandatory takeover bids. If one or more persons in a group of persons acting in concert acquire voting securities as a result of which the group in the aggregate would pass the 30% threshold, the members of the group will have a joint obligation to carry out a mandatory takeover bid, even though the individual group members do not pass the 30% threshold.

Global Public M&A Guide

Sweden

Select a Topic