The Regulation of Discharge from Liability in Swedish Company Law

Abstract

The Regulation of Discharge from Liability
A special feature in Swedish company law is the obligation of the annual general meeting (AGM) of shareholders to resolve on discharge from liability for the members of the board and the chief executive officer (CEO). Such discharge relates to each person individually to the effect that the management of the company is approved and that no claims for damages may be brought against the individual – unless an exception applies. Thus, the discharge limits the liability of the board towards the company.
Major shareholders typically participate in the AGM, whereas many institutional investors are represented by proxies. The discharge regulation in Swedish company law is topical considering the new benchmark policy from the Institutional Shareholder Services (ISS), one of the leading proxy advisory firms. In the 2023 ISS benchmark proxy voting policies of 1 December 2022, it is recommended that shareholders vote against discharge from liability in companies with shares with unequal voting rights.3 This has raised the issue of minority protection in regulation and the potential abuse of minority rights.