As a general rule, unlisted shares may not be held in an investment savings account (ISK, a Swedish account type with its own tax rules). Shares that are not traded on a regulated market or an MTF platform (multilateral trading facility) are normally classed as non-permitted assets and therefore cannot be bought or transferred to an ISK in the same way as ordinary exchange-listed shares.
This does not mean that private individuals are prevented from investing in unlisted companies. The difference lies in how the shares are held, how ownership is registered and how dividends, gains and losses are taxed. An ISK is an account type with special tax rules, not a requirement for owning shares outside the stock exchange.
For anyone who wants to buy and sell unlisted shares, the key question is therefore how the holding is to be registered and administered. Depending on the company's structure, the shares can be held in an ordinary custody account or registered directly in the company's share register.
Why are unlisted shares normally not allowed in an ISK?
An investment savings account may only contain certain types of assets. These include financial instruments traded on a regulated market or an MTF platform, fund units and cash. Shares that do not meet the conditions are normally classed as non-permitted and may only be held in the account in special exceptional cases.
So it is not the company's size, revenue or number of shareholders that determines whether the shares may be held in an ISK. The assessment is based mainly on where the shares are traded. In everyday speech a share may be described as unlisted even though it is traded on an MTF platform, but under the ISK rules it is the actual trading venue that is decisive.
There are also restrictions that apply regardless of trading venue. Shares may normally not be held in an ISK if the owner, together with related parties, controls more than ten per cent of the votes or capital in the company. Qualified shares in close companies (fåmansföretag, Swedish companies controlled by a few owners) are also non-permitted assets.
An ISK and an ordinary custody account are taxed differently
In an ISK you are not taxed separately when an asset is sold at a profit or pays a dividend. Instead, an annual standardised income is calculated based on the account's capital base. Gains and losses on permitted assets normally do not need to be declared individually, but an individual loss cannot be deducted either.
Unlisted shares owned outside an ISK are taxed on the actual result. On a sale, the proceeds are compared with the shares' acquisition cost to calculate a capital gain or capital loss. Non-qualified shares in unlisted companies are usually reported on form K12 (a Swedish tax return form). Dividends and capital gains are then normally taxed on five sixths of the amount, which corresponds to an effective tax of 25 per cent. Qualified shares in close companies are generally reported on form K10 and are subject to special tax rules.
A correct calculation requires the owner to have kept records showing:
- What the shares cost when they were bought.
- How many shares were acquired.
- Brokerage fees and other costs relating to the transaction.
- Transfer agreements and contract notes.
- Share issues, splits and other corporate events.
- The proceeds and costs of a future sale.
The difference between qualified and non-qualified shares affects both which form is to be used and how tax on unlisted shares is calculated. The classification therefore needs to be clear before the gain, loss or dividend is reported.
How unlisted shares are held in practice
The fact that unlisted shares may not be held in an ISK does not mean that the ownership is informal. The shareholder must be registered according to the structure that applies to the company. In a company connected to Euroclear Sweden (the Swedish central securities depository), the holding is registered electronically and can normally be held in an ordinary share custody account or a securities account, provided that the account provider can accept the share class.
If the company is not connected to Euroclear, ownership is registered directly in the company's share register. When the shares change hands, the transfer needs to be documented and the new owner entered in the share register. The company's board is responsible for keeping the share register correctly in companies that are not central securities depository companies (avstämningsbolag).
When a trade is carried out via our platform, settlement is adapted to how the shares are registered. In companies connected to Euroclear, delivery and payment can be handled through the ordinary securities system, while other trades require a purchase agreement and registration in the share register. The entire flow from placing an order to payment and delivery is part of how trading in unlisted shares works. A clear transfer agreement for unlisted shares also brings together the terms for price, payment, completion and any transfer restrictions.
What happens if a share held in an ISK is delisted?
A share can be a permitted investment asset when it is bought but later stop being traded on the marketplace that made it permitted in an ISK. This can happen when a company is delisted. The share then normally becomes a non-permitted asset, even if it was in the account before trading ceased.
As a general rule, the share may remain in the investment savings account up to and including the sixtieth day after the end of the quarter in which it became non-permitted. If it does not become a permitted investment asset again within that period, it needs to be moved to a form of custody that can handle the holding, for example an ordinary custody account or a securities account.
A delisting does not automatically mean that the shares lose their value or that the owner loses their holding. The company can continue to operate as an unlisted company, but the conditions for trading, pricing and disclosure change. The practical handling is also affected by whether the delisting follows a takeover, a voluntary decision, a bankruptcy or another corporate event. The bank or account provider should therefore be contacted as soon as a delisting has been announced.
Can the shares be moved to an ISK after a listing?
As long as the shares are not traded on a regulated market or an MTF platform, they normally cannot be moved to an ISK. If the company is later listed on a stock exchange or the shares are admitted to trading on an approved marketplace, they can become investment assets. The holding must also meet the other conditions, including the rules on ownership share and qualified shares.
The shares are not automatically moved to an ISK when trading begins. The owner first needs to check that the bank can accept the share class and then request a transfer from the ordinary custody account. For tax purposes, the transfer is treated as a sale at the shares' market value at the time of transfer. Any capital gain or capital loss must therefore be reported even though the owner keeps the shares.
The original acquisition cost, the transfer documents and information about later corporate events need to be kept when the gain or loss is to be calculated. The records become particularly important when you need to declare unlisted shares after a sale or a transfer to an ISK that is treated as a sale for tax purposes.
How to invest in unlisted shares without an ISK
An ISK is not a prerequisite for investing in unlisted companies. The trade is carried out outside the investment savings account and ownership is registered in an ordinary custody account, a securities account or directly in the company's share register. Taxation is then based on the dividends, gains and losses that actually arise.
On our platform, investors can place buy and sell orders in unlisted companies. When the terms of a buy order and a sell order match, the trade can be carried out according to the process that applies to the share class in question. Before placing an order, the investor needs to understand how the shares will be delivered, which restrictions may affect the transfer and which records need to be kept.
The market covers companies from several industries and stages of development. You can explore unlisted companies, follow market activity and review company data before you assess whether an investment suits your finances, time horizon and risk level.
An ISK does not change the risk of the investment
The question of unlisted shares and ISKs is mainly about custody and taxation. The account type does not determine whether a company is a good investment. Unlisted shares are usually traded less often than listed shares, there are often fewer buyers and sellers, and there may be no continuous market price. There is therefore no guarantee that a holding can be sold at the desired time or at a particular price.
Access to public information can also be more limited than in listed companies. The assessment needs to cover the company's finances, business model, funding needs, ownership structure, valuation and possible routes to a future exit. The investor is personally responsible for weighing the possible return against the risk of losing all or part of the capital.
Our working methods and licences set the framework for how orders are received, transactions are handled and market data is presented. If you have questions about custody, placing orders or an ongoing transaction, you can contact us before you proceed. Individual tax questions should be checked with the Swedish Tax Agency (Skatteverket) or a qualified tax adviser.
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 correct and up to date, but makes 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 the use of the article or reliance on its content. Anyone considering acting on the information should obtain independent advice from the Swedish Tax Agency (Skatteverket) or another qualified adviser.
