Aktiebolag (AB)

An Aktiebolag, or AB for short, is a company in Sweden. It is the Swedish word for a limited company or corporation. Most companies in Sweden are Aktiebolags.

What is an Aktiebolag?

An Aktiebolag is its own “legal person.” This means it can own stuff, borrow money, hire people, and get sued separately from the people who own it or run it. The owners of an AB are not on the hook for the AB’s debts or problems beyond the money they put in. Their money and things are protected.

To set up an AB, you must invest some starting money called share capital. This has to be at least 25,000 Swedish kronor, which is about 2,400 US dollars or 2,200 euros. You must also register the AB with the Swedish government and follow specific rules.

Shares and shareholders

The people who own an AB are called shareholders. They each own a certain number of “shares” in the company. The more shares you own, the more of the company you own.

Shareholders get to vote on big decisions for the company, like who should be on the board of directors. They also get a share of the company’s profits, called dividends. But if the company loses money or goes bankrupt, shareholders can lose the money they put in.

Running an Aktiebolag

An AB has to have a board of directors with at least one person on it. The board is in charge of the big-picture stuff and makes major decisions. They appoint a managing director (like a CEO) to handle the day-to-day business.

The board and the managing director must seek the company’s best interests. They can get in trouble if they do a terrible job or break the law. However, as long as they run things properly, their money and property are protected, even if the company has problems.

Types of Aktiebolag

There are two main types of Aktiebolags in Sweden: private and public.

Private Aktiebolags

A private AB is called a “privat aktiebolag”. Its shares can’t be sold to the public on a stock market. Most Swedish companies are private ABs.

Private ABs can be owned by just one person or a small group. Many are family businesses or owned by a few partners or investors. They tend to be smaller companies.

The minimum share capital for a private AB is 25,000 kronor, so starting one doesn’t take much money. However, the owners still get legal protection from the AB structure.

Public Aktiebolags

A public AB is called a “publikt aktiebolag”. It can offer shares to the public and be listed on a stock exchange, like the Stockholm Stock Exchange, which allows it to raise a lot of money from many investors.

Public ABs tend to be more prominent companies. Well-known Swedish public companies include Volvo, Ericsson, H&M, and IKEA.

Since public ABs can take money from the public, they must follow extra rules and oversight to protect investors. For example, they have stricter accounting and reporting requirements. They also need more starting capital – at least 500,000 kronor.

Taxes and regulations

Aktiebolags have to pay corporate taxes on their profits. The corporate tax rate in Sweden is usually 20.6%. They also have to collect payroll taxes and pension payments for their employees.

Aktiebolags must report adequately. Each year, they prepare an annual report with their financial statements and information about the business. More prominent companies need to have an independent auditor check their books.

Special rules, enshrined in Swedish laws like the Companies Act, also apply to Aktiebolags, such as shareholder meetings, record-keeping, and the appointment and removal of directors.

Why choose an Aktiebolag?

There are some significant advantages to using an AB structure for a business in Sweden:

Limited liability protects the owners’ assets
The AB structure is well-recognized and trusted
It’s easier to raise money by selling shares
Favorable tax rules in certain situations

But there are also potential downsides:

More formal set-up process and costs
Ongoing reporting and compliance requirements
There is less control and privacy than in a sole proprietorship or partnership

When choosing a structure for a Swedish company, getting advice from a lawyer or accountant is a good idea. An AB makes sense for some businesses but not all.

History of the Aktiebolag

The Aktiebolag has a long history in Sweden. The first Swedish law on limited companies was passed in 1848, but the modern Aktiebolag, as we know it, took shape with the Companies Act of 1975.

Before Aktiebolags became common, most Swedish companies were sole proprietorships or partnerships. The AB structure allowed businesses to grow extensively and for more people to invest in them.

Aktiebolags were essential to Sweden’s industrialization and economic growth in the 20th century. Many of Sweden’s big multinational corporations started as small Aktiebolags.

Aktiebolag vs. other countries

Aktiebolags are specific to Sweden, but a lot of other countries have similar company structures:

In the UK and US, the rough equivalent is a private or public limited company (Ltd or PLC)
In Germany it’s the Aktiengesellschaft (AG) or Gesellschaft mit beschränkter Haftung (GmbH)
In France it’s the Société Anonyme (SA) or Société par Actions Simplifiée (SAS)

The exact rules and details differ in each country, but the basic idea of a company being its own legal “person” to protect its owners is similar.

Some countries also have particular types of corporations, like the American “S corporation” or the German “Unternehmergesellschaft,” with extra benefits for small businesses. Sweden doesn’t have these, but private Aktiebolags serve a similar purpose.

Should you start an Aktiebolag?

Starting an Aktiebolag is a big decision. It can protect you and help your business grow, but it is also a serious commitment. You have to:

Invest starting capital
Deal with more paperwork and regulations
Pay corporate taxes and fees
Have your financial information on the public record

Starting as a sole proprietor (“enskild firma”) can be more straightforward if you’re just doing a small side business or testing an idea. You can always convert to an AB later if things take off.

But if you have employees, investors, or significant financial risks, an Aktiebolag is probably the way to go. It’s the standard way to organize a serious business in Sweden.

The best bet is to talk to an expert and plan based on your situation. Consider your finances, long-term goals, and what will help your company succeed. An Aktiebolag isn’t one-size-fits-all but is the key to growth and stability for many Swedish businesses.