On April 21 2004, a special working group called the Code Group presented a proposal for a Swedish code of corporate governance. The Code Group consists of representatives from the Government Commission on Business Confidence and representatives of listed companies, investors and the Stockholm Stock Exchange.
The primary purpose of the code is to improve corporate governance in Swedish companies, with the aim of enhancing the efficiency and competitiveness of Swedish businesses. Another purpose is to enhance the understanding and confidence of foreign investors and other actors in the international capital markets in Swedish corporate governance.
The code is intended to form part of self-regulation and is written primarily for Swedish companies listed on the Stockholm Stock Exchange and other regulated markets in Sweden. A company may deviate from the code but, if it does, it must state its reasons for the divergence according to the principle of comply or explain.
The Code's fundamental values
The main principles underlying the Code Group's work have been:
- to create good conditions for shareholders to exercise an active and responsible ownership role;
- to create a sound balance of power between the owners, the board of directors and the executive management, to enable shareholders to assert their interests in all aspects of corporate governance;
- to create a clear division of rules and responsibilities between the various governing bodies;
- to uphold the principle of equal treatment of shareholders in accordance with the Swedish Companies Act, not least in relation to companies that have one or a few controlling shareholders alongside broadly dispersed minority shareholdings; and
- to create transparency for shareholders, the capital markets and the rest of society.
Rules for corporate governance
The Code contains six material sections on rules for corporate governance as follows:
- the shareholders' meeting;
- appointing the board and the auditor;
- the board of directors;
- the senior management;
- the auditors; and
- the corporate governance report.
Entry into force
The code has been circulated for comments. Remarks must be made by no later than September 30 2004. Comments and proposals received will be reviewed in late 2004. The aim is to have the code finalized and in practice at the beginning of 2005.