An EEA-residency requirement for the board -- with a dispensation route
Under the Swedish Companies Act (Aktiebolagslagen), an Aktiebolag (AB) generally requires at least
half of its board members, and the managing director if one is appointed, to be resident within the
European Economic Area (EEA). A 100%-foreign-owned company cannot simply appoint an entirely
non-EEA-resident board without addressing this requirement. Where a company cannot meet the threshold, it
can apply to Bolagsverket, the Swedish Companies Registration Office, for a dispensation (exemption),
which generally must be resolved before company registration can proceed. In practice, many foreign-owned
ABs find it faster to simply appoint one EEA-resident director or nominee rather than pursue the
exemption process, and companies relying on non-resident board members are generally also expected to
designate a local authorized contact person in Sweden to receive official correspondence.
Company formation and personal residency are two separate processes
Meeting the EEA board-residency requirement (whether through an EEA-resident director or a Bolagsverket
dispensation) does not itself give the foreign founder any right to live in Sweden. A non-EU national such
as an Indian citizen who wants to personally relocate to Sweden and run the company day-to-day applies
separately for a self-employed person's residence permit through Migrationsverket, requiring personal
funds of at least SEK 200,000 to support themselves for two years (plus SEK 100,000 per accompanying
spouse and SEK 50,000 per accompanying child), majority ownership (at least 51%) of the business, relevant
industry and business-management experience, and a viable business plan with financial projections. The
permit is generally granted for up to two years and is renewable; a separate, shorter exploratory permit
(up to nine months) exists for scouting and setting up the business before applying for the operating
permit.
Incorporating an Indian company as an NRI founder based in Sweden
An NRI in Sweden setting up an Indian private limited company follows the same Companies Act, 2013
framework as a founder based anywhere else -- including the requirement that at least one director be a
person who has stayed in India for a specified minimum number of days in the preceding calendar year.
This resident-director requirement is commonly satisfied by bringing in an India-based co-director or
professional nominee.
Common mistakes NRI founders and investors in Sweden make:
- Assuming a 100%-foreign-owned Swedish AB can have an entirely non-EEA-resident board without
either an EEA-resident director or a Bolagsverket dispensation.
- Confusing the EEA board-residency requirement with personal Swedish residency -- appointing an
EEA-resident nominee director does not itself let the founder live in Sweden.
- Not appointing a resident director for an Indian company back home, causing compliance issues
under India's Companies Act, 2013.
