9.2.1.1 Board of directors

Section 8: 1 and 8: 46 of the Swedish Companies’ Act (hereafter: ‘SCA’) require that a company shall have a board of directors (styrelsen) of at least three members. The number or minimum or maximum number of board members shall be stated in the articles of association, according to section 1: 3 SCA. According to section 8: 4 SCA, the board is responsible for the organisation of the company and the management of the company’s affairs, it shall assess the financial position of the company, and it shall ensure that the company is structured such that accounting, management of funds and the general financial situation are satisfactorily monitored.

This Swedish board structure seems to be a unitary board structure, because the board is responsible for monitoring as well as the management of the company’s affairs. In a dual board structure both tasks are carried out by a different corporate organ, which is not the case in Sweden. Actually, the Swedish board structure is more of a third alternative to the Dutch dual board structure and the British unitary board structure (Lekvall 2009: 370-371). There are three hierarchical bodies in the Swedish model: the general meeting, the board of directors and the managing director. A governance body has considerable power to issue directives to subordinate bodies or to take over decision-making. The general meeting can issue instructions to the board of directors, whereas the board of directors can do the same to the managing director. The considerable power of the general meeting originates from the traditional fact that Swedish companies have large and influential shareholders. The board of directors consists solely or primarily of NEDs.1 According to rule 4.3 of the SCCG, at most one member of the executive management of the company may be a member of the board. This is usually the managing director (Lekvall 2009: 371).