Corporate Governance: A Key Responsibility for Leading Swedish Companies

Corporate governance plays a vital role in ensuring that companies in Sweden are managed efficiently and effectively. The Swedish Corporate Governance Code outlines the key responsibilities of directors and executives, emphasizing transparency and accountability.

Director Responsibilities

The Code stipulates that no more than one director elected by shareholders’ meetings may be part of the executive management team or a subsidiary of the company. Typically, this position is held by the chief executive officer (CEO). However, it is common for boards to consist entirely or predominantly of non-executive directors.

• At least two members of the board must be independent of both the company and its major shareholders.
• This ensures diverse perspectives and responsible ownership practices.

CEO Role

The CEO is responsible for day-to-day management. Matters outside their scope require written instructions from the board. The board may instruct the CEO on how to handle specific issues or provide guidance on decision-making processes.

• The CEO has the right to attend and speak at board meetings, unless otherwise decided by the board in a particular circumstance.
• The CEO is responsible for implementing the board’s decisions and ensuring that company operations are aligned with its strategic goals.

Statutory Auditor

The company’s statutory auditor is appointed by shareholders’ meetings to examine annual accounts, accounting practices, and management of the company. The auditor reports directly to shareholders, providing an independent assessment of company performance.

• In their annual audit report, auditors must provide a statement on whether:
  • The annual report complies with relevant legislation.
  • It accurately reflects company results and position.
  • It is consistent with other reporting requirements.

Code Compliance

The Swedish Corporate Governance Code sets out rules for corporate governance practices. Companies listed on the Swedish stock exchange are expected to apply the Code, while foreign companies admitted to trading must comply with either the Swedish Code or equivalent codes in their home country.

• Companies that do not apply the Swedish Code must explain their deviation and provide an explanation of important differences from the Code in their corporate governance report or website.
• The Code aims to ensure transparency, accountability, and responsible ownership practices among Swedish companies.