Statutory Regulations

Business entities must comply with the Accounting Act of 1976 (BL) and limited liability companies also must comply with the Companies Act of 1975 (ABL). These two laws establish the accounting and reporting requirements for Swedish business entities based on generally accepted accounting principles including historical cost, the accrual method, the going concern principle, consistency and conservatism. In many instances, the laws refer to "good accounting practice" without de_ning it, leaving it to other authorities to specify the detailed rules.

Accounting Records

Under the Accounting Act, companies, partnerships and sole proprietors must account "in accordance with good accounting practice" and comply with the following requirements:
- Account for all transactions systematically and in chronological order and ensure that all transactions are supported by appropriate documentation;
- Prepare annual reports; and
- File and store all vouchers, books of account and other accounting material in Sweden for 10 years.

Parent companies must also prepare consolidated accounts.

If necessary to understand the accounting system, the business must supply a description of the organisation and procedures together with a chart of accounts. For a computerised accounting system, the description must include systems documentation and documentation of transactions so that individual transactions can be examined without difficulty.

Both the Accounting Act and the Companies Act require that companies maintain a register of shareholders.

Filing Requirements

Limited companies shall hold the annual general meeting of shareholders within six months after year end. A copy of the approved annual report must be filed with the Patent & Registration Office within one month after the general meeting. The Patent & Registration Office will charge a penalty fee for late filing if the approved copy of the annual report is not filed within seven months after year end.

Normally the financial year is a 12-month period. However, when a change of accounting year is implemented, the financial year may be extended to 18 months or reduced to less than 12 months. Permissible financial year-ends are 31 December, 30 April, 30 June and 31 August. The authorities permit a different financial year-end in exceptional circumstances. If a company is part of an international group with a different year-end, it normally qualifies for this exception.

The contents of this article are intended as a general guide to the subject matter. Specialist advice should be sought for your specific circumstances.

For further information contact Per Snellman on Tel: +468 613 9000 0r Fax: +468 791 7511; or enter a text search 'Ernst & Young' and 'Business Monitor'.