News
The Impact of Brexit on Manager Residency Requirements
The transition period following the United Kingdom’s withdrawal from the European Union (“ Brexit”) will end on December 31, 2020. The end of the transition period can, in many different ways, impact businesses that either have ties to the United Kingdom or depend on staff and/or company officers from the United Kingdom.
In the case of both Sweden registered limited companies (Swedish “AB”) and company branches (Swedish ”filialer”) with international ties, one of the ways a business might be affected is through the Swedish regulations regarding board member and management residency requirements. Swedish law requires any Chief Executive Officer or Deputy Chief Executive Officer registered for a Sweden limited company or for a registered company branch to reside within the European Economic Area. The same legislation requires that at least half of any Swedish registered limited company’s board of directors and (if applicable) at least half their deputy board members to also reside within the European Economic Area.
As things currently stand, the United Kingdom will not be considered part of the European Economic Area after the end of 2020, and any companies whose boards of directors or executives do not conform with the rules mentioned above would therefore be called to rectify this lack or, in the long-term, face the risk of a forced liquidation process being initiated by the Swedish governmental. It is also possible for companies to apply for special dispensation from the residency rules, but though we deem it likely that most such applications brought about by Brexit will be granted in the initial stage, there are no guarantees with regards to the Swedish Companies Registration Office long-term willingness to accept deviations from the normal residency requirements.
Aurenav can, for a fee, assist with board changes and/or dispensation applications. If possible, such processes should, however, preferably be initiated well before the end of the year since it can take the Companies Registration Office several weeks to process a board change or board dispensation application.
In the case of both Sweden registered limited companies (Swedish “AB”) and company branches (Swedish ”filialer”) with international ties, one of the ways a business might be affected is through the Swedish regulations regarding board member and management residency requirements. Swedish law requires any Chief Executive Officer or Deputy Chief Executive Officer registered for a Sweden limited company or for a registered company branch to reside within the European Economic Area. The same legislation requires that at least half of any Swedish registered limited company’s board of directors and (if applicable) at least half their deputy board members to also reside within the European Economic Area.
As things currently stand, the United Kingdom will not be considered part of the European Economic Area after the end of 2020, and any companies whose boards of directors or executives do not conform with the rules mentioned above would therefore be called to rectify this lack or, in the long-term, face the risk of a forced liquidation process being initiated by the Swedish governmental. It is also possible for companies to apply for special dispensation from the residency rules, but though we deem it likely that most such applications brought about by Brexit will be granted in the initial stage, there are no guarantees with regards to the Swedish Companies Registration Office long-term willingness to accept deviations from the normal residency requirements.
Aurenav can, for a fee, assist with board changes and/or dispensation applications. If possible, such processes should, however, preferably be initiated well before the end of the year since it can take the Companies Registration Office several weeks to process a board change or board dispensation application.