Evolution of the Code
This section contains a brief overview of the historical background and development of the current Code.
The origins of the Code
The original Code was a result of a collaboration between the governmental Commission on Business Confidence and a number of private corporate sector organisations. These set up a body called the Code Group, comprising three members of the Commission on Business Confidence and six representatives of the corporate sector and chaired by Erik Åsbrink, a former Finance Minister who was also chair of the Commission.
The first proposal
The Code Group presented its proposed Swedish Corporate Governance Code in April 2004. At the same time, the Commission on Business Confidence presented its findings, chapters 5-8 of which provide particularly relevant background to the Commission's commitment to the development of a Swedish corporate governance code.
- Swedish Corporate Governance Code – A Proposal by the Code Group (SOU 2004:46)
- Näringslivet och Förtroendet (SOU 2004:47) – Report of the Commission on Business Confidence (with summary in English)
The Code Group's proposal was circulated for comment and people and organisations were invited to give opinions. The proposal was also the subject of general debate in the media and at a number of seminars and conferences.
The final version of the Code was introduced on 1 July 2005
On the basis of comments and opinions raised in the debate, the Code Group presented its final version of the Code in December 2004. It also published a report containing formal responses from various organisations and the Group's position concerning these.
- Swedish Corporate Governance Code, applicable from 1 July 2005
- Swedish Corporate Governance Code – Report of the Code Group (SOU 2004:130)
This code was included in the listing requirements of the Stockholm Stock Exchange from 1 July 2005 and applied to all companies on the Exchange's A List and all companies on the O List with an asset value of more than SEK 3 billion, a total of 70 companies at that time. By the end of 2007, the number of "Code companies" had risen to 115.
Supplementary instructions regarding the original Code
After the Code was introduced, the Corporate Governance Board made a number of modifications, partly as a result of new legislation, partly to alleviate certain difficulties that had arisen in interpretation and practical application of the Code. These took the form of Code Instructions. A total of five Instructions were issued during the lifetime of the original version of the Code:
The revised Code was introduced on 1 July 2008 and made applicable to all stock exchange listed companies
In the autumn of 2007, the Board decided to broaden the application of the Code to all stock exchange listed companies. The three primary reasons for this were as follows:
- Good corporate governance is regarded as equally important for small as for large listed companies.
- Where relevant, the Code could serve as a genuine alternative to legislation, (which would not be the case if the Code applied only to large companies, especially in the implementation of EU directives).
- Application of the Code would bring Sweden into line with other EU member states, where national corporate governance codes usually apply to all stock exchange listed companies.
At the same time, the Board decided to conduct a major review of the Code in order to remove weaknesses and difficulties in application and to adapt the rules to meet the conditions in which smaller companies operate. The Board presented its proposed new Code on 1 February 2008. The proposal was circulated for comment and was the subject of much discussion in the media and elsewhere before the Board presented its final version of the revised Code in May 2008.
This revised version of the Swedish Corporate Governance Code was applicable from 1 July 2008 to all companies whose shares are traded on regulated markets in Sweden, namely NASDAQ OMX Stockholm and NGM Equity.
The second revised Code came into force on 1 February 2011
In 2010, the Board implemented a further set of modifications to the Swedish Corporate Governance Code, with new rules on management remuneration (based on a recommendation from the EU) and board independence as well as changes to the rules concerning audit committees and the information requirements. The new version of the Code came into force on 1 February 2010.