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Swedish Commercial Transactions: No Clear Limits on Usury

In Sweden, there are no specific laws or regulations that establish a clear limit for usury rates in commercial transactions. This means that lenders can charge interest rates without restriction, as long as they comply with general consumer protection rules.

Responsible Lending and Borrowing Practices

However, the Swedish Financial Supervisory Authority (Finansinspektionen) has issued guidelines on responsible lending and borrowing practices. These guidelines encourage lenders to adopt sustainable lending practices and to avoid aggressive debt collection methods.

Banking Industry Regulations

In addition, some sectors, such as the banking industry, are subject to specific regulations that aim to protect consumers from abusive interest rates. For example, banks are prohibited from charging interest rates higher than 24% per annum on consumer loans.

Floating Charges and Similar Security Interests

Sweden recognizes floating charges and similar security interests, which allow lenders to secure their claims against a broader range of assets rather than specific collateral. These types of security interests are commonly used in commercial transactions, such as loan financings.

Specific Types of Assets

In Sweden, there is no general security interest that covers all assets of the borrower. However, borrowers can grant floating charges or similar security interests over specific types of assets, such as:

• Inventory
• Claims
• Other moveable property

Downstream, Upstream, and Cross-Stream Guarantees

Swedish limited liability companies (aktiebolag) are subject to specific rules regarding downstream, upstream, and cross-stream guarantees. These rules aim to prevent shareholders from using the company’s assets to support their personal interests or to benefit from transactions that do not have corporate benefit for the company.

Examples of Restrictions

For example:

• A Swedish limited liability company is prohibited from granting loans or providing security for loans to its shareholders or connected persons.
• The company must ensure that any guarantee or security it provides has sufficient corporate benefit and does not reduce the company’s net worth.

Restrictions on the Target

In Sweden, there are restrictions on the target of a loan or guarantee. For example:

• A Swedish limited liability company is generally prohibited from granting an advance, providing loans, or providing security for loans to enable the debtor or any connected person to acquire shares in the company or its parent company.
• These restrictions aim to prevent financial assistance being used to support transactions that do not have corporate benefit for the company.

Exceptions

However, there are exceptions for refinancings and security take-ups involving the target company, which can be made some time after the acquisition has been completed.

Conclusion

In Sweden, commercial transactions are subject to a range of rules and regulations that aim to protect consumers and prevent abusive lending practices. While there is no clear limit on usury rates, lenders must comply with general consumer protection rules and guidelines on responsible lending and borrowing practices. Additionally, specific sectors, such as the banking industry, are subject to additional regulations aimed at protecting consumers from abusive interest rates.