Trading partnership and limited partnership

Content

Trading partnerships and limited partnerships are operated by two or more partners. The partners in a trading partnership are personally liable for the partnership's agreements and debts.

A limited partnership is a special form of trading partnership that must include at least one partner with limited liability (a limited partner) and at least one with unlimited liability (a general partner). In the following information, we use the term “partnership” to refer to both trading partnerships and limited partnerships, unless otherwise stated.

Register the company via internet

Use the e-service verksamt.se to register the company with Bolagsverket. All the partners must sign the application. To do this they need Swedish e-identifications.

At the e-service you will also find more information on the registration which business owners have to do with Skatteverket (the Swedish tax authority) for taxes, VAT and payroll tax.

If you apply via an application form, the partners’ signatures must be certified by one person.

Please observe that if necessary permission from the guardian or chief guardian must be forwarded to Bolagsverket by regular mail. If a permission is necessary the guardian must also sign the application form.

Legal entity

A partnership becomes a legal entity when it is registered in the trade register at Bolagsverket (the Swedish Companies Registration Office). A legal entity may enter into agreements, own property, and be a party in legal proceedings.

Registration number

The partnership is given its registration number upon registration. The number is used as an identity number for contacts with authorities and others.

Partnership agreement

For a partnership to be formed, the partners must enter into an agreement to jointly operate a business as an enterprise. The agreement may be written or oral. We recommend that the agreement be put in writing as this makes it easier to prove to what the partners have agreed upon. A written partnership agreement must be signed by all partners. The agreement is not a public document and should not be filed for registration.

Liability

The partners are personally liable for the agreements of the enterprise being honoured and its debts paid. The liability is joint and several. That means that a party which has a claim on the partnership may demand the payment of the entire amount from any of the partners. The partners (except for the limited partner in a limited partnership) are liable for the partnership's debts up to the full amount of their assets. The limited liability of limited partners means that their liability is limited to the capital investment they have agreed to contribute to the partnership.

A new partner who joins the partnership is liable for all the partnership's previous debts as well. A partner who has resigned from the partnership cannot be held liable for the partnership's debts incurred after his resignation has been registered and advertised in Post- och Inrikes Tidningar (the Swedish Official Gazette).

When a person (natural or legal) is entered into the register as a partner in a partnership we shall send a special notification as proof of the registration to the partner. The notification will in the first place be forwarded to the address kept with the Swedish Civil Register (folkbokföringen). The same applies when we strike off a partner from the trade register.

There must be at least one general partner in a limited partnership

Not all of the partners in a limited partnership can be limited partners. There must be at least one general partner. Both natural persons and legal entities may be partners. Foundations and non-profit associations are not allowed to be general partners, even though they may be considered legal entities.

If the partnership does not have any general partners, the partnership is no longer considered a limited partnership but a trading partnership, and the person(s) who were limited partners then have unlimited liability.

Auditor

In most cases a partnership does not need to register an auditor. However, in some cases the enterprise must after all have an auditor.

An authorized or approved public accountant must be appointed if the enterprise has at least one legal entity as a partner and at least two of the following criteria for each of the two latest financial years are met

• more than 3 employees (as an average)
• a balance sheet total of more than 1.5 million kronor
• a net turnover of more than 3 million kronor

If an auditor is appointed, he/she must be reported to Bolagsverket for registration.

Large partnerships

An auditor being an authorized public accountant or an auditor with the examination of professional competence as an approved public accountant is required in partnerships with only natural persons as partners if the enterprise is considered a large enterprise. The auditor must be reported to Bolagsverket for registration.

A partnership fulfilling at least two of the following criteria for each of the two latest financial years are considered large

• more than 50 employees (as an average)
• a balance sheet total of more than 40 million kronor
• a net turnover of more than 80 million kronor

Accounts

A partnership is required to keep accounts, and the income of the partnership is declared in enclosures attached to the partners' personal tax returns. Large partnerships and partnerships owned by legal entities are required to prepare an annual report and to submit the annual report along with the auditor's report to us.

Registration by county

The partnership is registered by Bolagsverket in the trade register for the county in which the enterprise is located. The protection of the business name applies in that county. See also under the heading Protective registration.

Protective registration

The business name can be registered in more than one county where the enterprise is intended to be operated, referred to as protective registration. An additional fee per county is charged.

Business name

In order for Bolagsverket to be able to approve of a business name, the name proposal should not be too general, for example it is not sufficient to only describe the nature of the business. The name is not allowed to be too similar to a business name previously proposed or registered by anyone else in the same line of business. The same applies to trademarks in comparable classes.

The business name may not be misleading in relation to the geographical area to which the partnership belongs or the business the enterprise carries on. It is not allowed to contain the designations or symbols of certain international organizations or designations or symbols protected by copyright.

You cannot usually include another person's surname in the business name. There are other limitations imposed by the Swedish Trade Names Act and other laws. For trading partnerships the word “handelsbolag” must always be included in the business name. The same applies to the word “kommanditbolag” for a limited partnership.

Vary the name proposals

It is advisable to submit more than one name proposal when registering, preferably as different as possible. When you submit more than one name proposal we shall examine them according to your priorities. Please note that we register the first acceptable of your proposals without contacting you first.

A business name may consist of:

• Fictitious words, e.g. Handelsbolaget Cajin.
• Fictitious word + business word, e.g. Handelsbolaget Wertex Plåt.
• First name and surname + business word, e.g. Bo Alms Snickeri Handelsbolag.
• Initials + business word, e.g. Kommanditbolaget CK Båt.
• Geographical designation + business word, e.g. Storgatans Tobak Handelsbolag.

You may check already registered business names in Näringslivsregistret (the Trade and Industry Register). Or you may phone us to make a preliminary check whether your proposed name can be mixed up with the name of another business enterprise. You can carry out an equivalent search against trademarks through the Trademarks Department of the Swedish Patent and Registration Office in Söderhamn.

The fact that the proposed business name is not found in our register does not necessarily mean that it can be registered. We cannot provide a full judgement according to the provisions of the Swedish Trade Names Act over the phone – we merely perform a quick search. Never order printed matter, signs, etc., before your business name is registered.

Business activities and line of business

When you register a partnership, you must state the nature of the intended business. The business must be accurately stated before we can judge the business name. The activities or line of business of the partnership must be clearly stated. Write e.g. trade in children's wear, not just “trade”.

Examples of how you may state the nature of your business

• Trade in shoes.
• Car repair shop.
• Systems design and software programming within the IT line of business.

Authorized signatories

Authorized signatories are the person(s) who has the right to sign on behalf of the partnership with legally binding effect. The partners represent the partnership individually unless otherwise agreed. One or more partners must always be authorized as signatory/signatories. State the name of the person(s) whom is/are authorized to sign on behalf of the partnership, individually or jointly. Limited partners are not allowed to be authorized signatories.

Power of attorney

It can often be useful to allow an individual who is not a partner in the partnership to perform bank and postal errands. In that case, it is sufficient to provide a power of attorney that applies only to those matters. The power of attorney forms for such purposes are usually available at the bank or post office. Bolagsverket does not register powers of attorney. If, however, the partnership wishes to grant authority to an individual in all matters pertaining to the partnership, that person may be granted power of procuration and registered. See also Power of procuration.

Power of procuration

A power of procuration is a general power of attorney (commercial power of attorney) issued to an individual who is referred to as procuration holder. The procuration holder has the authority to represent the partnership and sign on behalf of the partnership in all matters pertaining to the partnership's business.

The authorization as a procuration holder applies with certain restrictions. Without special authorization, the procuration holder may not sell or transfer the partnership's real property or site leasehold rights, nor may the procuration holder apply for a mortgage against or grant rights to the partnership's real property or leaseholds.

A written procuration grants the right to represent the partnership before courts of law and government authorities. Procuration may be granted to more persons in such a way that it can be used only by the persons jointly (joint procuration).

A procuration holder does not have to be registered with Bolagsverket for the procuration to be valid, but it is useful for the procuration holder and those who do business through him. Restrictions to the procuration for example that it should apply only to bank matters or specific property are not registered.

Additional information or enclosure in connection with procuration

When applying for registration of power of procuration, the procuration should be filed in the original or a certified copy (if the procuration is in writing). For special authorization or joint procuration only a statement of the contents is needed. We also require personal information about the procuration holder. Use the webservice verksamt.se to send this in. Note that you cannot send in the procuration via the e-service.

Minors

Persons under the age of 18 are minors, to whom restrictions apply. The parents are legal guardians of children in their custody. If the child is in the sole custody of one parent, that parent is the sole guardian. If a minor does not have a legal guardian, the district court will appoint one.

Persons under the age of 16

Persons under the age of 16 are not allowed to personally be a partner in a trading partnership or limited partnership, but a legal guardian may be the partner on behalf of the child if the chief guardian of the municipality in which the child resides has granted permission. The legal guardian is registered as the partner.

The legal guardian's personal particulars must be specified on the application form, which must be signed by the legal guardian and certified by one person. The written permission of the chief guardian must be given on the application form or be enclosed to it.

Persons of the age 16-18

A person who is at least 16 but not yet 18 years old may be a partner in a trading partnership or limited partnership if the legal guardians and the chief guardian have given their permission. The minor is registered as the partner. The written permission of the legal guardians and the chief guardian must be given on the application form or be enclosed to it.

If the legal guardian is a partner of the same partnership

If a minor (regardless of age) is to be part of the same trading partnership or limited partnership as his/her legal guardian, a trustee for the minor must be appointed by the chief guardian.

On the application form or in a document enclosed to it, the trustee must state that he/she approves of the partnership agreement. The decision to appoint the trustee must be filed as an enclosure to the application. In this respect as well, the chief guardian's written permission must be found on the application form or must be enclosed to it. Information about the legal guardian(s) may be written directly on the form or enclosed. The chief guardian may consent to a minor running a partnership. The consent must be filed with the application for registration.

Requirements for partners

Persons who wish to register a partnership are not allowed to be in bankruptcy, subject to trade ban, or be under the supervision of a guardian pursuant to the Swedish Parental Code (Föräldrabalken). A partner who is not registered in the Swedish Civil Register must, when applying for registration, enclose a certified copy of his/her passport or other identification document.

Additional information and enclosures if a legal entity is a partner

The following documents must be enclosed concerning non-profit associations and foundations being partners:

• certified copies of the statutes of the association or foundation and
• documents showing the board of directors.

The registration number for the association or the foundation must be stated.

If a foundation or non-profit association is a partner in a trading partnership, the application for registration must state the full names, personal identity numbers, and delivery addresses for board members and deputy members of the foundation or association. A foundation may be managed by a legal entity instead of a board of directors, usually a municipality or a government authority (which is known as affiliated management). In such cases, the name, registration number, and delivery address of the managing body must be stated, along with the full name, personal identity number, and delivery address of a representative of the managing body.

If a foreign (not Swedish) legal entity is registered as a partner in a partnership, a copy of the certificate of registration must be enclosed.

Changes

If a partnership wants to register changes of the information filed with Bolagsverket, an application must be sent in. You can report changes through the e-service verksamt.se.

Change of address for the partnership or the officials

Such information is not automatically transferred from the Skatteverket (the tax authorities) or other government authorities to our register. Therefore, an authorized signatory must always notify Bolagsverket directly of the changes of address.

Change of business activities

A notification of change of business activities must be signed by all the partners.

Change of partnership officials

Please note that notification of change of partners or officials must be signed by all remaining and new partners. If the change is made via the e-service verksamt.se they will sign with their e-identifications. If the change is made with an application form, the signatures of the new officials must be certified by one person.

A partner that has resigned from a partnership also has the right to personally file notice of his/her resignation with Bolagsverket. Such notification requires only that person's signature. Bear in mind, however, that a partnership is based on a contractual relationship between the parties. If one of the partners, independently and without the consent of other partners, notifies Bolagsverket that he/she has resigned, it does not mean that the contractual relationship is automatically nullified. The matter must be discussed with the other partners.

Only one left?

A partnership must have at least two partners. If the number of partners has decreased to less than two partners, the partnership is considered to have entered into liquidation when this situation has existed for six months or more. The remaining partner may either strike off the partnership from the register by notifying Bolagsverket that business activities have ceased, or he/she may notify that at least one new partner has joined the partnership. If the partnership has entered into liquidation, this should be notified Bolagsverket for registration.

Furthermore, Bolagsverket may now according to a special procedure, without further notice strike off a partnership with less than two partners from the register when the situation has lasted for more than a year and information about liquidation has not been filed for registration.

Change of business name

A change of the business name must be signed by all partners when applied for.

Change of procuration holder

When submitting an application for changing of procuration holder(s) the power of procuration must be filed in the original or a certified copy if it is a matter of a written procuration. For special authorization or joint procuration it is sufficient with a statement of the contents.

We also require personal particulars on the procuration holder and his/her signature certified by one person. Use the e-service verksamt.se. The application must be signed by all the partners.

Moving to another county

Moving of the partnership to another county involves striking off the partnership in the county where it was formerly registered and a new registration in another county. This is considered a change, and therefore you should not use the form for striking off in these cases. Once the move has been registered, the business name is only protected in the new county where the business is carried on. In certain cases you may have to change your business name, if a business name identical with yours – or which could easily be confused with yours – is already registered in the new county.

Striking off

Partnerships may be wound–up by liquidation or bankruptcy. After the termination of the liquidation process or the discharge of the bankruptcy the partnership must be struck off the register. This must be reported for registration with Bolagsverket.

If the enterprise is reconstructed and the business activities are carried on in a new form of business enterprise, this must also be reported to Bolagsverket for registration.

Fees

The required fee must be paid when the application is sent to Bolagsverket.

If you pay via post, bank or your Internet bank, state the following information on the payment slip or in the message field:

• New registration of trading partnership (HB) or new registration of limited partnership (KB) and the first name proposal or
• Change in HB (or KB) and the name and registration number of the partnership.
• Plusgiro 95 06 08-0
• Bankgiro 5050-0255

References

The most important Swedish laws and ordinances in this area are:

• The Act on Partnerships and Non-registered Partnerships – (Lagen (1980:1102) om handelsbolag och enkla bolag)
• The Trade Register Act – (Handelsregisterlagen [1974:157])
• The Trade Register Regulation – (Handelsregisterförordningen [1974:188])
• The Procuration Act – (Prokuralagen [1974:158])
• The Trade Names Act – (Firmalagen [1974:156])
• The Parental Code – (Föräldrabalken [1949:381])
• The Bookkeeping Act – (Bokföringslagen [1999:1078])
• The Annual Accounts Act – (Årsredovisningslagen [1995:1554])

Nr 12 e, 4 November, 2010