Due Diligence in Finance: A Crucial Component of Transactions in Sweden
In Sweden, due diligence plays a vital role in ensuring transparency and trust among parties involved in finance transactions. It is essential for both buyers and sellers to conduct thorough due diligence reviews to guarantee the success of the transaction.
Scope of Due Diligence
The scope of due diligence typically covers various aspects, including:
- Legal structure and financing arrangements
- Ownership and use of information technology, intellectual property, real estate, employee agreements, licenses and permits
- Litigation and compliance with laws
- Financial and accounting position of the target company or assets
Due Diligence Reports
Vendors often provide due diligence reports to prospective buyers, which are typically provided on a non-reliance basis. This means that the buyer must conduct their own review and assessment of the information provided.
Liability and Limitations
Sellers in Sweden can be liable for pre-contractual or misleading statements, but such liability can usually be excluded by agreement between the parties. However, if the seller has caused loss or damage through wilful misconduct or gross negligence, limitations of liability may not apply.
Publicly Available Information
Publicly available information on private companies and their assets is extensive in Sweden. The Swedish Companies Registration Office (SCRO) makes various filings publicly available, including:
- Articles of association
- Annual reports
- Company representatives
- Share details
- Corporate mortgages
- Real property records through the Swedish mapping, cadastral, and land registration authority
Searches Conducted by Buyers
A buyer typically conducts standard searches in SCRO’s registers, land register, patent and registration office, district court, administrative court, and appeal courts with jurisdiction over the target company’s location. This helps ensure a thorough understanding of the transaction and potential risks involved.
Buyer’s Knowledge and Liability
In Sweden, a buyer’s actual or deemed knowledge can impact claims they may bring against a seller relating to a transaction. The transfer agreement typically stipulates that the buyer cannot make a claim for breach of warranties if they had actual knowledge of the facts or circumstances constituting the breach or if such information was fairly disclosed in the data room material.
Conclusion
Overall, due diligence is a vital component of finance transactions in Sweden, and parties involved must be transparent and thorough in their assessments to ensure a successful deal. By conducting thorough due diligence reviews, buyers and sellers can mitigate risks and ensure that all parties are informed and agreeable to the terms of the transaction.