9.3 Summary and conclusion

The previous two sections describe the history of corporate governance in Sweden and the six legal issues of independence. The history of corporate governance starts with the description of the Corporate Governance Policy of 2001, which was succeeded by the first Swedish Code of Corporate Governance in 2005. This SCCG 2005 was revised significantly in 2008 and some minor adjustments were made in 2010. With respect to independence, the corporate governance initiatives in Sweden have evolved over time. Table 9-4 gives an overview of the differences.

The six legal issues contribute to the three building blocks of independence: person, composition/structure and preconditions. (Consideration 9.1) The Swedish person building block has weak features, because it distinguishes two types of independence: from the company and its executive management and from the shareholders. These two should be combined, because relationships in both categories impair the independent judgement of board members. The assessment of independence focuses on independence in fact and in appearance, which can be considered to be good. The composition/ structure building block is a weak part of the independence chain in Sweden.

Employees are part of the board and are thus not independent, and effectively only two board members have to be independent of the company and its executive management as well as of the shareholders. The nomination committee is dominated by shareholders and the other board committees may have members with links to shareholders as well. The preconditions building block has some weak features as well. Shareholders have the upper hand in the appointment and removal of board members. The methodology of evaluation need not be disclosed and external evaluation is not required either. CEO duality, conflict of interest situations and enforcement are the well-developed preconditions in Sweden. Below, all three building blocks are described. They are compared with the situation in the United Kingdom and the Netherlands in chapter 10 of this study.