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

2.1 Main legal framework

Sweden's regulatory regime aims to protect the shareholders of a target company and to create a system of rules for participants in a takeover. The main rules and principles of Swedish law relating to public takeover bids on a regulated market can be found in:

• The Swedish Public Takeovers Act (2006:451) ("Takeover Act") (Lag om offentliga uppköpserbjudanden på aktiemarknaden);
• Takeover Rules for Regulated Markets ("Takeover Code") (Takeover-regler för reglerade marknader);
• The Swedish Financial Instruments Trading Act (1991:980) ("Trading Act") (Lag om handel med finansiella instrument), which contains rules on shareholding disclosure requirements and offer documents;
• The Swedish Companies Act (2005:551) ("Companies Act") (Aktiebolagslagen), which does not specifically address public offers, but contains relevant provisions relating to, for example, the duties of directors; and
• Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC ("Market Abuse Regulation" or "MAR"), which contains rules regarding insider information, insider dealing and market manipulation.

The main body of the Swedish takeover legislation is based on Directive 2004/25/EC of the European Parliament and of the Council of 21 April 2004 on takeover bids ("Takeover Directive"). This directive was aimed at harmonizing the rules on public takeover bids of the different Member States of the European Economic Area ("EEA"). Be that as it may, the Takeover Directive still allows Member States to take different approaches in connection with some important features of a public takeover bid (such as the percentage of shares that, upon acquisition, triggers a mandatory public takeover bid on the remaining shares of the target company, and the powers of the board of directors). Accordingly, there are still certain differences in the national rules of the respective Member States of the EEA regarding public takeover bids.

2.2 The Swedish Foreign Direct Investment Review Act

On 1 December 2023, Sweden implemented the Swedish Foreign Direct Investment Review Act (Lag om granskning av utländska direktinvesteringar) ("FDI-Act"), which includes a general screening mechanism for investments in certain businesses deemed protection-worthy. This legislation aims to safeguard national security, public order, and public safety.

The Swedish FDI Act requires mandatory notification for investments that result in the acquisition of voting rights in companies conducting protected activities. The specific thresholds are:

• 10%
• 20%
• 30%
• 50%
• 65%
• 90%

These thresholds apply to both direct and indirect investments. The notification obligation can be triggered even if the investor does not gain control over the company but acquires a significant minority holding, provided the abovementioned thresholds are met. Investors must notify Swedish authorities and obtain clearance before completing the investment. The Swedish Inspectorate of Strategic Products ("ISP") (Inspektionen för Strategiska Produkter) oversees the review process. From receipt of a complete notification, ISP has 25 working days to decide whether to leave the notification without action or to initiate an in-depth review. A standstill obligation applies during ISP's review. If an investment is made without the required notification, the ISP can still review it ex officio, impose penalties and in worst case, revoke the investment. 

2.3 Other rules and principles

While the aforementioned legislation contains the main legal framework for public takeover bids in Sweden, there are a number of additional rules and principles that are to be taken into account when preparing or conducting a public takeover bid, such as:

1. The rules relating to sanctions for insider dealing and market manipulation as set out in the Swedish Securities Market Abuse Penalties Act (2016:1307) ("Securities Market Abuse Penalties Act") (Lag om straff för marknadsmissbruk på värdepappersmarknaden) and in the Act with Swedish Complementing Regulations to the EU Market Abuse Regulation (2016:1306) (Lag med kompletterande bestämmelser till EU:s marknadsmissbruksförordning).
2. The rules relating to the public offer of securities, and the admission to trading of these securities on a regulated market, are set out in the Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14 June 2017 on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market, and repealing Directive 2003/71/EC.
3. The general rules on the supervision and control over the financial markets including the framework legislation in the Swedish Securities Markets Act (2007:528) ("Securities Markets Act") (Lag om vädepappersmarknaden). The Securities Markets Act imposes a statutory obligation on the exchanges to establish a self-regulatory Takeover Code.
4. Further rules may apply to bids on companies in certain sectors, such as companies operating under the supervision of the Swedish Financial Supervisory Authority ("SFSA") (Finansinspektionen), for example companies with license to conduct banking, insurance or finance business operations.
5. The rules and regulations regarding merger control. These rules and regulations are not further discussed herein.

2.4 Supervision and enforcement

Public takeover bids are subject to the supervision and control of the Disciplinary Committees of the Regulated Markets, the Swedish Securities Council (Aktiemarknadsnämnden) ("SSC") and ultimately the SFSA. The SFSA is the principal securities regulator in Sweden.

The abovementioned bodies have a number of legal tools available to supervise and enforce compliance with the public takeover bid rules, including administrative fines.

The SSC and the SFSA (and ultimately the administrative courts) also have the power to grant, in certain cases, exemptions from the rules that would otherwise apply to a public takeover bid.

2.5 General principles

The following general principles apply to public takeovers in Sweden. These rules are based on the EU Takeover Directive which has been implemented in the Takeover Act:

1. all holders of the same class of securities of a target company must be afforded equivalent treatment. Moreover, if a person acquires control of a company, the other holders of securities must be protected;
2. the holders of the securities of a target company must have sufficient time and information to enable them to reach a properly informed decision on the bid. Where it advises the holders of securities, the board of the target company must give its views on the effects of implementation of the bid on employment, conditions of employment and the locations of the target company's places of business;
3. the board of a target company must act in the interests of the company as a whole and must not deny the holders of securities the opportunity to decide on the merits of the bid;
4. false conditions for trading must not be created in the securities of the target company, the offeror company or any other company concerned by the bid in such a way that the rise or fall of the prices of the securities becomes artificial and the normal functioning of the markets is distorted;
5. an offeror must announce a bid only after ensuring that it has certain funds and after taking all reasonable measures to secure the implementation of any other type of consideration; and
6. a target company must not be hindered in the conduct of its affairs for longer than is reasonable by a bid for its securities.

It should be noted that Swedish law has a strong focus on the rights of shareholders in relation to takeover bids. Thus, principle (c) above should be construed as meaning that the board of directors should act in the interest of the shareholders as a whole (see rule II.17 in the Takeover Code).