In Sweden there are more than 450,000 limited liability companies. Of these, approximately 0.1% are listed on a stock exchange. It should be noted that a company must be public, which requires that the company has share capital of at least SEK 500,000 and that it is regulated in the articles of association as regarding itself as a public company. After this the company may apply to be listed on any exchange or marketplace.

What to consider if you have invested in unlisted shares

The share register or owner register for publicly traded companies is handled digitally by Euroclear, while for unlisted companies it is primarily managed via a bound book or Excel file. When trading in unlisted shares, one should be sure to get confirmation of registration for the purchased shares (for example by excerpts from the share register) and be sure to save the settlement note.

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When a share register is stored digitally, greater transparency is usually achieved by the company.

Unlisted shares often have a higher risk, but greater potential

Investing in unlisted companies is exciting to many and there are many factors that differ from investing in listed companies. The biggest drawback of investing in unlisted companies versus listed is that it can be very difficult to sell their shares. Furthermore, disclosure of information from unlisted companies may be deficient. Investments in unlisted shares usually have a greater chance of increasing, as the company is often young and it is not really known what the companies’ earnings capacity will be and whether the company will need more capital through share issues. On the other hand, the potential of unlisted shares is usually much greater and the thrill of following a company development up close is great.

Different taxation of unlisted shares

Note that unlisted shares are taxed differently than listed shares and it is important to be aware that these rules may vary depending upon ownership and your role in the company. Read more about this here at BeUnlisted.

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