What compliance steps are required to launch a private equity fund in Sweden with foreign investors?

Hello

Thank you for your inquiry regarding the establishment of a private equity fund in Sweden with foreign investors. Below is a summary of the key compliance steps and regulatory considerations.

Regulatory Framework
The primary regulatory framework you will need to navigate is the European Union's Alternative Investment Fund Managers Directive (AIFMD), which has been incorporated into Swedish law through the Swedish Alternative Investment Fund Managers Act (Lag (2013:561) om förvaltare av alternativa investeringsfonder). This framework governs the management and marketing of alternative investment funds (AIFs) within the EU.

Fund Structure
In Sweden, private equity funds are commonly structured as limited liability companies (aktiebolag) or limited partnerships. The choice of legal structure has significant implications for taxation, investor liability, and corporate governance, so it is a crucial initial decision.

Licensing and Registration
The Swedish Financial Supervisory Authority (SFSA) is the main regulatory body. Depending on the total value of the assets under management (AUM), you will either need to register with or apply for full authorization from the SFSA:

Registration: If your AUM is below €100 million (with leverage) or €500 million (without leverage), you may only need to register with the SFSA. The registration process requires the submission of information about your fund's investment strategy, the fund's articles of association, and information on the prevention of money laundering and terrorist financing.

Authorization: If your AUM exceeds these thresholds, you will need to apply for full authorization as an AIFM. This is a more extensive process requiring detailed documentation on your firm's organization, risk management, and compliance procedures.

Regulatory Filings and Ongoing Disclosures
You will be subject to several filing and disclosure requirements, including:

Prospectus and Key Investor Information Document (KIID): For funds marketed to retail investors, a detailed prospectus and a KIID must be provided.

Annual Reports: An annual report for the fund must be prepared and made available to investors and the SFSA.

Reporting to SFSA: Regular reports on the fund's activities must be submitted to the SFSA.

Anti-Money Laundering (AML) and Know Your Customer (KYC): You will be required to comply with Swedish AML and KYC regulations, which include disclosing the identity of ultimate beneficial owners to the authorities.

Foreign Investors and FDI Screening
For foreign investors, especially those from outside the EU/EEA, you need to be aware of Sweden's Foreign Direct Investment (FDI) screening regime. Investments in sensitive sectors may require notification to and approval from the Inspectorate of Strategic Products (ISP).

Corporate Governance
Your fund will need to comply with both Swedish corporate law and the specific governance requirements of the AIFMD. This includes rules on delegation of functions, risk management, and the appointment of a depository.

Local Counsel
Given the complexity of the Swedish and EU regulations, it is highly advisable to engage experienced local legal counsel in Sweden. They can provide tailored advice on fund structuring, the SFSA application process, and ongoing compliance obligations.

I hope this overview is helpful. Should you wish to discuss your specific situation in more detail, I would be happy to offer a more in-depth consultation.

Best regards,