The right to information in unlisted companies differs from that in listed companies. When shares are not traded on a regulated market, the company is not subject to the same ongoing disclosure requirements as a listed company. Shareholders therefore often have to rely on the annual report, the general meeting and the information the company chooses to provide between meetings.
At the same time, as a shareholder you are not without rights of access. The Swedish Companies Act (aktiebolagslagen) gives you, among other things, the right to see documents ahead of the annual general meeting, to ask questions about the company's finances and to access the minutes of the meeting. In companies with no more than ten shareholders, the right to examine the accounts and other documents is more extensive.
The difference between the statutory right to information and voluntary disclosure is important when you invest in unlisted shares. One company may keep its owners well informed without being obliged to publish every update, while another may limit its communication to the information the law requires.
Unlisted companies do not have the same disclosure requirements as listed companies
Listed companies must publish information that may affect the price of their shares and follow rules on financial reporting, inside information and equal treatment of the market. As a starting point, corresponding requirements do not apply to a company whose shares are neither traded on a regulated market nor covered by a trading venue with its own disclosure rules.
This does not mean that an unlisted company can keep all information secret. Limited companies must prepare an annual report and file it with the Swedish Companies Registration Office (Bolagsverket). The registry also holds public information on matters such as the articles of association, the board, the authorised signatories and the registered share capital. In companies that are not CSD companies (avstämningsbolag, companies whose shares are registered with the securities depository Euroclear Sweden), the share register must also be kept available to anyone who wishes to see it.
Quarterly reports, shareholder letters and ongoing business updates can give a more current picture than the annual report, but such reporting is often voluntary. Further disclosure obligations may follow from the articles of association, a shareholders' agreement, an investment agreement or the terms of a trading venue.
The general meeting is central to the shareholder's right to information
The general meeting is the formal forum where shareholders can review the company's management, take a position on the annual report and vote on the matters put forward. Ahead of the annual general meeting, the accounting documents and, where the company has an auditor, the auditor's report must be kept available to shareholders for at least two weeks. Anyone who requests the documents and provides their postal address must receive copies free of charge.
At the meeting, a shareholder may request information about circumstances that affect the assessment of an item on the agenda or the company's financial situation. The board and the CEO must provide the information if it can be given without significant harm to the company. If the information is not available at the meeting, the answer must normally be made available in writing within two weeks and sent to the shareholder who asked the question.
The right to information in connection with the general meeting includes, among other things, the following:
- Accounting documents and any auditor's report ahead of the annual general meeting.
- Information needed to assess an item on the agenda.
- Information that affects the assessment of the company's financial situation.
- A written answer within two weeks when the information is not available at the meeting.
- Access to the minutes no later than two weeks after the general meeting.
The right to ask questions is not the same as an unlimited right to the company's internal material. The questions need to be connected to the company's financial situation or an item dealt with at the meeting, and the company's interest in protecting sensitive information may limit what is disclosed.
Shareholders in smaller companies have an extended right of inspection
In limited companies with no more than ten shareholders, a more far-reaching right of inspection applies. Each shareholder must be given the opportunity to examine the accounts and other documents relating to the business, to the extent needed to assess the company's position and results or a particular matter ahead of the general meeting.
The board and the CEO must also assist with the necessary investigation and provide copies, provided this can be done without unreasonable cost or inconvenience. The right can matter, for example, when a part-owner needs to understand major costs, loans, related-party transactions or changes that have affected the company's results.
Nor is the extended right of inspection unlimited. The company does not have to disclose information if doing so would entail an appreciable risk of serious harm. A shareholder therefore cannot simply demand access to every agreement, board minute or internal conversation, especially if the material contains trade secrets or information that could harm the company's negotiating position.
The share register shows who is entitled to act as a shareholder
All limited companies must keep a share register with details of the company's shares and shareholders. In companies that are not CSD companies, the board is responsible for ensuring that the share register is accurate, preserved and kept available. The share register gives insight into ownership, but it does not normally show the company's financial position or what private agreements exist between the shareholders.
Registration also has legal significance. As a general rule, a new owner cannot exercise the rights attached to the shares until the owner has been entered in the share register. This applies, among other things, to the ability to attend and vote at the general meeting and to use the right to information that a shareholder has.
How registration is carried out depends on whether the shares are connected to Euroclear or handled directly in the company's share register. That difference also affects how an unlisted trade goes from order to registered ownership, since payment, delivery and registration of ownership need to be adapted to the company's structure.
A buyer does not have the same rights as an existing shareholder
Someone considering buying shares normally has no statutory right to examine the company in the same way as an already registered shareholder. Before the transaction, access to information therefore depends on what the seller and the company are prepared to disclose. In some transactions a non-disclosure agreement is used before the buyer is given access to more sensitive material.
Which information is needed depends on the company and the size of the investment, but a buyer should usually try to get a clear picture of:
- The company's latest annual report and subsequent financial development.
- Share capital, share classes and the current ownership structure.
- The articles of association and any restrictions on the right to transfer shares.
- Completed and planned funding rounds.
- Debts, capital needs and other circumstances that may affect the valuation.
- Material risks, disputes and dependencies in the business.
The information needs to be assessed together with the terms of the transaction itself. A clear share transfer agreement for unlisted shares can state what information the buyer has received, what warranties the seller gives and what applies if the information later turns out to be incorrect or incomplete.
The company may be entitled to withhold sensitive information
The Swedish Companies Act balances the shareholder's need for insight against the company's need to protect its business. The board may refuse to answer a question at the general meeting if the information cannot be given without significant harm to the company. This may concern, for example, ongoing negotiations, trade secrets, pricing, customer contracts or information that a competitor could exploit.
If the board refuses to provide requested information at the general meeting, the shareholder may, under certain conditions, request that the information be given to the company's auditor instead. The auditor must then assess whether the information ought to have affected the auditor's report or otherwise gives cause for a comment. The shareholder does not necessarily receive the information itself, but the auditor's statement must be kept available and sent to the person who requested the information.
The line between justified confidentiality and insufficient insight must be assessed on the circumstances. A general wish to see all internal documentation has a different standing from a clearly defined request needed to understand a major cost, a resolution of the general meeting or a sharp change in the company's results.
Ongoing information often depends on the company's own practice
Many unlisted companies communicate more than the law requires. Regular shareholder letters, quarterly updates, presentations and information about major financings can make it easier for shareholders to follow the company's development. Other companies mainly provide information in connection with the annual general meeting or when a decision requires the shareholders' participation.
Effective shareholder communication should make it possible to understand both progress and problems. Updates that only describe new customers, launches and expansion plans do not give a complete picture if they lack information on cash flow, cost development, financing needs or deviations from earlier targets.
The lack of standardised information is an important reason why we work for a more transparent unlisted market. By bringing together company data, price history and market activity, we create more points of comparison in a market where information is otherwise often scattered between companies, shareholders and individual transactions.
Good disclosure reduces uncertainty but does not remove the risk
Access to information is a prerequisite for assessing an unlisted company, but it does not eliminate investment risk. Even a company that communicates regularly can run into problems with financing, profitability or demand. Information can also quickly become out of date, especially in smaller growth companies where the business changes between two reporting dates.
Anyone analysing an unlisted holding therefore needs to assess when the information was produced, who provided it and what assumptions it is based on. It is also important to notice what is missing. An older annual report may be correct and still offer limited guidance if the company has since raised new capital, lost a major customer or changed its cost base.
You can explore unlisted companies and market data before you decide on an investment or sale. If you have questions about a company traded through our platform, available orders or how a transaction is carried out, you can contact us.
Disclaimer: The content of this article is provided for information purposes only and does not constitute tax advice, legal advice or an individual recommendation. Tax outcomes are affected by applicable law and the specific circumstances of each individual case. Eqvor strives to ensure that the information is accurate and up to date, but gives no express or implied warranties regarding the accuracy, completeness or timeliness of the content. To the extent permitted by applicable law, Eqvor disclaims liability for any damage or loss arising from use of the article or reliance on its content. Anyone considering acting on the information should seek independent advice from the Swedish Tax Agency (Skatteverket) or another qualified adviser.
