The form of the company is being eroded – many are critical Next year, the requirement for initial capital can be halved in limited liability companies. But the reform is not in demand by the entrepreneurial organizations. There is a great risk that more and more people are using companies as a criminal tool. One of the points in the agreement between the Social Democrats, the Green Party, the Center Party and the Liberals is about lowering the minimum share capital requirement in limited liability companies to SEK 25,000.
The proposal has been made to facilitate corporate conditions in Sweden. But according to an interview in Sweden’s radio, there is nothing that is demanded by the entrepreneurs’ representatives.
– It is a cosmetic proposal that does not really have any significance for business or corporate conditions. I have not heard one of our members requesting this proposal. That is what says Patrik Nilsson, head of social policy at Småföretagas Riksförbund.
Nor do Entrepreneurs, another industry association, demand a reduction in the share capital. Daniel Wiberg believes that the level of SEK 50,000 is a reasonable level. On the contrary, the level of the share capital provides some protection against unthinking entrepreneurship. If a limited liability company is affected by financial problems, a buffer of SEK 50,000 is consumed relatively quickly and in many cases even before the creditors are aware of the problems. If the share capital is further lowered, there is a risk that the confidence in the form of the company will be eroded.
The SRF consultants are also critical: “It is not the level of share capital that is a crucial obstacle to starting a limited liability company. These are tricky regulations and bureaucratic reporting that are the real problems,” says Roland Sigbladh, Federal Director of the Srf consultants’ union. The financial crime authority has previously pointed out the negative consequences that resulted when the share capital was lowered and when the auditing requirement disappeared for smaller companies. The number of criminal companies has increased in recent years and this proposal is not going to slow down. We already see today in UC’s investigations that up to 30 percent of all bankruptcies consist of companies that are rogue in one way or another. If the reduced requirement for share capital is implemented without increasing resources against law enforcement, we will probably see an increase in bankruptcies and by rogue companies. Companies are started to deceive society and suppliers for money to an increasing extent.