Sweden's New Foreign Direct Investment Regime Part 3 - A Close Relative of an Investor
6 December 2023
The Swedish FDI regime came into effect just last week on Friday, 1 December 2023. To highlight this, throughout this week, we will explain to you the most important aspects of the new regime. Yesterday, we delved into investments covered by the new regime. Today, we will be taking a look at certain other factors that can affect whether a filing obligation arises in connection with an investment.
- Greenfield vs. Brownfield: While the most common type of investment covered by the new regime is likely to be acquisitions of shares in limited companies already conducting protected activities (a so-called brownfield investment), the regime also covers investments that result in the establishment of a new entity as well as the acquisition of shelf-companies (greenfield investment), as long as the purpose of the investment is to conduct protected activities.
- Beyond the limited company: The act is also not limited to investments in limited companies. Investments in partnerships (both registered and unregistered), cooperative associations, and foundations are also covered by the act as long as the entity has its seat in Sweden. As unregistered partnerships can be created without the express intent of doing so, parties to, for example, joint ventures will need to carefully review whether the joint venture is an investment within the meaning of the FDI regime.
- Close relatives and group holdings: Although the act's thresholds with regard to voting rights nominally apply to the voting rights controlled by a single investor, the voting rights controlled by other persons must in some cases be added to the investor's own voting rights. In particular, this applies in two situations:
- Voting rights controlled by group companies with the same ultimate owner are considered to be controlled by the same investor. This means that if Group Company A controls 6% of the voting rights in Target Company C, Group Company B must file an investment if it results in B controlling 4% or more of the voting rights in C.
- The same rule also applies to voting rights controlled by close relatives: Voting rights controlled by close relatives are considered to be controlled by the same person. “Close relatives” are persons who are either married, cohabiting, in a parent-child relationship, or are married to or cohabiting with the child of another shareholder.
This means that the scope of the new FDI regime can ― depending on the circumstances of each case ― expand beyond the basic threshold of 10% of the voting rights. An assessment of the influence an investor acquires must therefore be made on a case-by-case basis.
Want to know more or think your company might be in scope? Don't hesitate to contact us.