Proposal for a new investment company structure presented by the Fund Market Inquiry

The Fund Market Inquiry has, in SOU 2025:117, presented a proposal for a new law on an investment company structure with variable capital (the Open-Ended Investment Company Act).

The purpose of the inquiry has been to strengthen the competitiveness of the Swedish fund market. To enable Swedish actors to compete on level playing field with actors in other EU countries, the new legal form of open-ended investment company is proposed. Investment fund structures are common in the international market, where the dominant structure is the Luxembourg SICAV (Société d’Investissement à Capital Variable).

Open-ended investment company’s shall be able to be used to form both UCITS (Sw. värdepappersfonder) (referred to as investment companies in the proposal) and alternative investment funds (referred to as AIF-companies in the proposal). It is also proposed that it shall be possible to form sub-funds of investment companies.

The activities of an open-ended investment company shall exclusively consist of making collective investments for the investors. As with Swedish limited liability companies, the shareholders shall not have any personal payment liability. The company shall not have any employees, but shall be managed by an external fund manager (a Swedish or EEA management company or AIF manager). An open-ended investment company shall have a board whose primary task will be to appoint an external fund manager and supervise its activities.

The share capital in an open-ended investment company shall be variable and consist of the total value of the open-ended investment company’s assets minus its liabilities. New shares shall be able to be issued immediately when the investor has contributed capital. An open-ended investment company shall also be able to issue different share classes with different terms. Unlike a Swedish limited liability company, there shall be no limitation regarding voting value differences. This means, amongst other things, that the external fund manager can hold a small portion of the capital in the fund, but through multiple-vote shares control the general meeting.

The Open-Ended Investment Company Act is intended as a corporate law act where the commercial law regulation in the Swedish Alternative Investment Fund Managers Act (Sw. lagen (2013:561) om förvaltare av alternativa investeringsfonder) and the Swedish UCITS Act (Sw. lagen (2004:46) om värdepappersfonder) shall still apply to the activities carried out through the open-ended investment company.

Investment companies shall be covered by the same income tax rules as UCITS and their shareholders shall be taxed in the same way as a unit-holders in an UCITS. AIF-companies shall be taxed essentially in the same way as Swedish limited liability companies. Shareholders in an AIF-company shall be taxed in a corresponding manner to a shareholder in a Swedish limited liability company.

The proposal is perceived as a major step in the right direction, particularly regarding the proposals concerning investment companies where the market has long requested a corporate fund structure for UCITS. Our initial view is therefore that this, together with the proposal on tax-transparent funds, may prove useful for the UCITS market. Also in relation to AIF-companies, our initial view is that the proposal represents several steps in the right direction that may facilitate matters for the market, for example the proposals on limited access to the shareholder register, absence of distribution restrictions, absence of limitations regarding voting value differences, more efficient redemption possibilities and that distributions could be made in a more efficient and flexible manner.

However, we also note that the proposal does not go as far as the market had wished in certain respects, particularly in relation to certain types of funds, such as debt funds.

The new law is proposed to enter into force on 1 July 2027.

For questions, please contact:

Carl Johan Zimdahl, Partner, carl.johan.zimdahl@msa.se

Oscar Gerdhem, Senior Associate, oscar.gerdhem@msa.se

Caroline Karlsson, Senior Associate, caroline.karlsson@msa.se

Oliver Friberg, Associate, oliver.friberg@msa.se