What is a limited company?
A limited company is a company in which the owners contribute capital by buying shares and in which the company is responsible for its own debts and agreements. Ownership is divided into shares that can be transferred, sold or inherited under the company's rules. Limited companies can be private or public, and public companies can be listed on a stock exchange.
In practice, the limited company form means that the company can grow, raise capital and develop its business without the owners risking more than the capital they have put in. The form is used by everything from small businesses to large groups and is central to both the Swedish and the international business landscape.
How a limited company works
Here are some common features that make it easier to understand how limited companies work.
- Limited liability for owners
- Ownership is based on shares
- The company is a legal entity
- Can raise capital through share issues
- Governed by the general meeting, the board of directors and the CEO
Once you know these parts, it becomes easier to understand how limited companies are structured and how ownership works.
Ownership and liability in a limited company
Worth bearing in mind
When you invest in a limited company, it is important to understand how ownership and liability work. Because shareholders have no personal liability, the risk is limited to the capital invested. This makes the limited company a secure and widely used company form for both listed and unlisted businesses.
It is also wise to look at how the company is structured. The board of directors, the CEO and the general meeting have different roles that together govern the business. In unlisted limited companies, agreements such as a shareholders' agreement, a post-transfer pre-emption right (hembud) and a right of first refusal (förköpsrätt) can also affect how ownership works. Understanding these parts gives you better insight into how you can buy, sell or influence the company as an owner.
Frequently asked questions
What does it take to start a limited company?
Share capital and registration with the Swedish Companies Registration Office (Bolagsverket). Articles of association and a board of directors must also be established.
What is the difference between a private and a public limited company?
Private companies may not offer shares to the public. Public companies can be listed on a stock exchange and face stricter formal requirements.
Are shareholders personally liable?
No. Shareholders only risk the capital they have invested in the company.
How are decisions made in a limited company?
Through the general meeting, where the shareholders vote. The board of directors and the CEO are then responsible for the day-to-day business.
Can I sell my shares whenever I want?
In listed companies, usually yes. In unlisted companies, rules such as a post-transfer pre-emption right (hembud) and a right of first refusal (förköpsrätt) can affect your ability to sell.