European Private Company : A solution for minority shareholders within small- and medium sized enterprises in Sweden?

Abstract: The Swedish companies act of 2005 regulates public and private limited companies. With these two classification shortages of rights prosper to different kinds of company structures that exist in today’s business environment. The Swedish companies act focuses on larger companies and therefore smaller companies are often neglected. Specific problems that may occur in a small- and medium sized enterprise are not solved. The problems that occur in small- and medium sized companies have rather a relation to the bargaining ex post. This is because small- and medium sized companies are close kept companies. Hence, the shareholders have a closer relation to each other and are often personally and financially deeply involved in the company, make it more likely for conflicts to occur. When these conflicts ensue, the interaction falls. The trust, loyalty and the long running band to each other weakens. Two options are then available; to try to repair the relation or to leave the company. The author’s opinion is that the proposal brought by the European Commission regarding European private company is sufficiently more minority-friendly in regulating these options. The insight provisions are for instance, more far reaching than in the Swedish companies act. Furthermore, the clearest difference is the right of withdrawal, which is found in the proposal for a European private company but not in the Swedish companies act. This provision is however limited. Despite this, a limited provision than no provision is a better option. Therefore the author states a registration to the European private company a better option for these companies. The author believes that if the proposal for the European private company is approved, this potential regulation could compete with the Swedish companies act since it is more beneficial, in not only a minority shareholder aspect but also the corporation structure as such.