The Year to Come and Year in Review summarise a selection of major developments you should be aware of from 2021, and a selection of key developments expected in 2022.
Key updates to
46
pieces of legislation in 2021 and 2022
In a world where increasing regulation and disruptive politics have become the new normal, our aim is to highlight key legal developments today and tomorrow to help you navigate the legal landscape and plan ahead.
Niclas Widjeskog, Managing Partner, Sweden
EBA publishes its work programme for 2022 | European Banking Authority (europa.eu): For 2022, the European Banking Authority (EBA) has set five vertical priorities: i) monitoring and updating the prudential framework for supervision and resolution; ii) revisiting and strengthening the EU-wide stress-testing framework; iii) leveraging the European centralised infrastructure for supervisory data (EUCLID); iv) deepening analysis and information-sharing in the areas of digital resilience, fintech and innovation; and v) AML/CFT and contributing to a new EU infrastructure.
New EU regime on anti-money laundering and counter financing of terrorism (AML/CTF): The European Commission (the EC) has proposed new legislation to strengthen EU AML/CTF. It includes the establishment of a new authority Anti-Money Laundering Authority (AMLA) to coordinate supervision and the cooperation among financial intelligence units within the EU. The legislative package remains subject to discussion in the European Parliament and Council.
Proposal for amended regulations on anti-money laundering and counter-terrorism financing measures: The Swedish Financial Supervisory Authority (Sw. Finansinspektionen) proposes an extension to the scope of application of their regulations (FFFS 2017:11) on AML/CTF. The amended regulations shall also apply to Swedish crowdfunding service providers, which are subject to the regulation on European Crowdfunding Service Providers. The amended regulations come into force on 1 January 2022.
Changes to Nasdaq Stockholm’s Main Market listing process: Nasdaq Stockholm has announced changes to its Nordic Main Market Rulebook for Issuers which will affect the listing process for new issuers in the Main Market segment. Issuers will be required to appoint a Listing Auditor to produce a report assessing whether the issuer fulfils the admission requirements and is suitable for listing. Nasdaq’s Stockholm Listing Committee will then review the report and decide whether to approve the application. Under the previous setup, Nasdaq Stockholm appointed an Exchange Auditor to perform the review. The new listing process is voluntary from 11 October 2021, and mandatory from 1 January 2022.
Swedish proposal to implement the MiFID II “quick fix”: After a lengthy legislative process, the so-called “quick fix” amendments to MiFID II came into force in February 2021. The amendments form part of a wider Covid-19 market recovery package which also includes amendments to the Prospectus and Securitisation Regulations. The changes to the MiFID II level 1 text comprise relaxations to investor protection measures and the position limits regime for commodity derivatives. Pending any forbearance measures in the interim, the changes will apply from 28 February 2022.
TRIPS waiver for COVID-19: The WTO continues to discuss a temporary waiver from the implementation, application and enforcement of certain IP rights under the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) insofar as they relate to the prevention and treatment of Covid-19. The proposed waiver has the support of over 100 countries, including the USA, but disagreement persists as to whether it is the most appropriate and effective way to address shortages of vaccines and Covid-19 related medications and technologies.
Focus areas for the Swedish Authority for Privacy Protection: The Swedish Authority for Privacy Protection (Sw. Integritetsskyddsmyndigheten) has announced that its focus area for 2021-2023 is to investigate complaints from individuals. The authority may initiate action on its own accord i.e., if a personal data incident is perceived or the authority has information to share.
Fit for 55: On an EU level, we will see discussions on a suite of legislative initiatives (fit for 55 package) across various sectors, including energy, transport and buildings, which is intended to fundamentally overhaul the EU’s climate policy framework and put the EU on track to deliver on its 2030 climate target of 55%.
EU corporate due diligence and accountability directive proposal: The European Commission is expected to publish a “sustainable corporate governance initiative” in the form of a directive by the end of Q1 2022. The directive would impose on companies of a certain status/size or risk category operating in the EU internal market due diligence and reporting obligations covering human rights, and the environmental and good governance impacts of their supply chain. It would also impose on directors a legal duty to consider, and to balance the interests of, a wide range of stakeholders (employees, consumers, local communities etc.) in their decision-making, rather than focusing on shareholders’ interests. This could extend to an obligation to implement procedures that address any adverse ESG and human rights impact on stakeholders.
Sustainable finance: In 2022, the disclosure obligations under the EU Taxonomy Regulation regarding pre-contractual information and annual reports will start to apply with regard to the first two environmental objectives. Market participants will also have to comply with the regulatory technical standard under the EU Disclosure Regulation which is expected to be finalised by the end of 2021.
Proposal to revoke regulations on MREL-reporting:The Swedish Financial Supervisory Authority (Sw. Finansinspektionen) proposes that the regulations (FFFS 2019:1) on periodic reporting of information regarding the minimum requirement for own funds and eligible liabilities requirement are to be revoked from 1 March 2022.
Finalisation of the Digital Finance Package: The Digital Finance Package, consisting of draft rules on digital operational resilience (DORA), markets in crypto assets (MiCA) and a pilot regime for DLT, is expected to be finalised in 2022.
Read more here and here... Hear more on DORA...
ESMA publishes technical standards under the Crowdfunding Regulation: In November 2021, the European Securities and Markets Authority (ESMA) published its final report on technical standards (RTS and ITS) under the Crowdfunding Regulation. The report covers all of EMSA’s 12 mandates, including four with a legal deadline of May 2022, in this area. The draft standards have been submitted to the European Commission for adoption.
Review of EU Solvency II: The European Commission has proposed a series of targeted amendments to the Solvency II regime, alongside a new framework for the recovery and resolution of insurers. The EU’s legislative bodies will now negotiate final texts based on the Commission’s proposals.
Implementation of the EU Copyright Directive: The deadline for implementation of the EU Directive on Copyright in the Digital Single Market passed on 7 June 2021. Implementation has been patchy, due in part to Covid-19, but is now well underway across most of the Member States. In Sweden this has resulted in a bill that amends the Copyright Act to introduce new restrictions concerning text and data extraction. It is also proposed that press publishers are to be given a new right related to copyright and that large providers of online content sharing services are to be given copyright responsibility for the content their users upload. The legislation is proposed to come into force on 1 July 2022.
Legislative proposals for AIFMD II: The European Commission is expected to publish legislative proposals for amendments to AIFMD by the end of 2021, for consideration by the Parliament and Council in 2022. The European Securities and Markets Authority’s (ESMA) guidelines on marketing communications also come into force on 2 February 2022.
Obligation to create climate declarations for buildings: In January, the act on climate declarations for buildings (Sw. lag (2021:787) om klimatdeklaration för byggnader) as well as the supplementary regulation (the Act), will come into force. The Act aims to reduce the climate impact of the construction phase of new buildings. It contains an obligation for property developers to create and submit a climate declaration when a new building that requires a building permit is constructed. The climate declaration should contain general information about the property as well as its climate impact. The law will affect developers that apply for building permits after 1 January 2022.
New Company Reorganisation Act: The Act to implement Directive (EU) 2017/1132 on company restructurings and insolvency, will come into force on 1 July 2022 in Sweden. The Act aims to increase efficiency in procedures concerning restructuring and insolvencies, discharge of distressed companies’ debts and to provide simpler processes than those currently available. For example, a national advisory service for companies in the early stages of financial distress will be implemented. Most importantly, is the introduction of a faster, simpler and less expensive procedure for public restructuring (Sw. offentlig skulduppgörelse). This is designed for companies not requiring measures other than to make the business profitable again. Under the new rules, companies will be able to obtain legally binding reconstruction plans in courts, whereas under the current legislation, only debts covered by composition with creditors are legally binding.
Digital reforms: The EU aims to reach agreement on the Digital Markets Act next year, which will reshape how digital businesses operate in Europe and regulate online “gatekeepers”, such as Amazon and Facebook.
New regulation for artificial intelligence: The EU will press ahead with its proposal to create a new regulatory superstructure for AI, including prohibiting some uses entirely and imposing significant and extensive compliance obligations on providers of “high risk” AI. The EU will press ahead with its proposal to create a new regulatory superstructure for AI, including prohibiting some uses entirely and imposing significant and extensive compliance obligations on providers of “high risk” AI.
Enhanced decision-making powers for the Swedish Competition Authority (SCA): Amendments to the Swedish Competition Code (Sw. konkurrenslagen (2008:579)) grant a wider mandate in several regards to the SCA (Sw. Konkurrensverket). For example, the SCA may impose competition sanctions (Sw. konkurrensskadeavgift) on companies in more situations than previously and use a new type of sanction: an investigation obstruction sanction (Sw. utredningsskadeavgift). The SCA is now the competent authority to impose sanctions, which were previously decided by courts. Furthermore, the SCA may now retrieve electronically stored information from dawn raids without consent from the investigated company.
Measures against foreign takeovers of security sensitive infrastructure and technology: Amendments to the Swedish Protective Security Act (Sw. säkerhetsskyddslagen (2018:585)) on the transfer of security-sensitive activities to prevent foreign takeovers of security sensitive infrastructure and technology that may harm Sweden’s security came into force. For example, before initiating a transfer of security sensitive activities (including share transfers), the seller is required to consult with the Swedish Security Service (Sw. Säkerhetspolisen), which will assess whether the transfer is appropriate from a security protection aspect. The authority has the right to impose obligations on operators initiating a transfer to take measures to fulfil their obligations under the act, and, ultimately, to decide on a prohibition of a transfer. Activities or transfers made in violation of a prohibition will be void.
The European Commission’s expansive use of Article 22 EUMR: The European Commission expanded its jurisdiction by claiming the right to review mergers which would not ordinarily be notifiable to it. This has created uncertainty for merging parties, who now run the risk of large fines if they are found to have closed in breach of the EU’s exercise of jurisdiction.
Measures should be taken before LIBOR is no longer published: The European Commission, European Central Bank, European Banking Authority and European Securities and Markets Authority published a joint statement to emphasise the measures that LIBOR users should take before the reference rate is no longer published. After 31 December, LIBOR will cease to be published
Regulation on Prospectus Exemption Documents in force: In April, the Commission Delegated Regulation (EU) 2021/528 came into force. It regulates content requirements for exemption documents published by issuers of securities within the EU. Exemption documents may be published to waive the obligation to publish a prospectus.
ESMA concerns regarding Special Purpose Acquisition Company (SPAC) prospectuses: ESMA issued a statement in July regarding the application of the Prospectus Regulation (EU) 2017/1129 to SPACs, and the importance of ensuring investor protection through disclosure in prospectuses.
SPACs have entered Nasdaq Nordic: The Special Purpose Acquisition Company (SPAC) trend reached Nasdaq Stockholm with four SPAC listings in 2021. SPACs are publicly traded investment vehicles which raise capital in an initial public offering to acquire a targeted private company, providing private companies with an alternative way to tap into public capital. Following amendments effective as of February 2021, the Nasdaq Nordic Main Market Rulebook features a section tailored to facilitate SPAC listings.
Increased scrutiny of beneficial ownership: Scrutiny by the Swedish Company Registration Office (Sw. Bolagsverket) of persons registering beneficial ownership has tightened. Digital identification will ensure that only persons who are officers of a company, e.g. board members, may register beneficial ownership information.
New rules on remuneration of the board and executive management and on incentive programs: New rules on renumeration to senior management and incentive programs issued by the Swedish Corporate Governance Board (Sw. Svensk kod för bolagsstyrning) came into force. In short, the rules in respect of incentive programs codify current market practice, i.e. that decisions on incentive programs shall be made by the general meeting. Decisions on incentive programs aimed at employees who are not board members or members of the company’s management, and which do not dilute the existing shares nor otherwise are of significant importance to the company, can be made by the board of directors.
The share premium reserve is divided: Amendments to the Swedish Companies Act (Sw. aktiebolagslagen) came into force, meaning that the share premium reserve is now divided into a restricted and non-restricted part. The restricted share premium reserve can be used for bonus issues before being booked on a balance sheet and can be reduced in the same way as the reserve fund.
Temporary Covid-19 related amendments to shareholders’ meetings expired: The temporary legislation (Sw. lag 2020:198 om tillfälliga undantag för att underlätta genomförandet av bolags- och föreningsstämmor) which allows for general meetings to take place without the physical presence of participants will cease to apply at the end of 2021.
Enhanced decision-making powers for the Swedish Competition Authority (SCA): Amendments to the Swedish Competition Code (Sw. konkurrenslagen (2008:579)) grant a wider mandate in several regards to the SCA (Sw. Konkurrensverket). For example, the SCA may impose competition sanctions (Sw. konkurrensskadeavgift) on companies in more situations than previously and use a new type of sanction: an investigation obstruction sanction (Sw. utredningsskadeavgift). The SCA is now the competent authority to impose sanctions, which were previously decided by courts. Furthermore, the SCA may now retrieve electronically stored information from dawn raids without consent from the investigated company.
State aid for landlords that reduced their rent due to Covid-19: The government adopted a new regulation as a measure to support certain tenants and to minimise the social and economic impact of Covid-19. In short, the new regulation gave landlords that lowered the fixed rent on commercial premises within certain time periods of 2021 an opportunity to apply for financial compensation. The compensation covered 50% maximum of the reduction.
Mega-fines for breach of the GDPR: The GDPR was intended to make data protection a boardroom issue by imposing turnover-based fines, similar to those under competition law. This year saw the first large GDPR fines imposed; with WhatsApp fined EUR 225m in Ireland and Amazon fined EUR 746m in Luxembourg.
New contracts and strict guidance for international data transfers: The European Commission issued new standard contractual clauses for international personal data transfers and the European Data Protection Board issued strict new guidance on when these transfers can take place.
Stockholm Chamber of Commerce (SCC) introduced a new dispute resolution mechanism: The SCC (Sw. Stockholms handelskammare) introduced the SCC rules for express dispute assessment. The SCC assessment is a voluntary and confidential procedure where a neutral expert will make a non-binding legal assessment (or a decision if the parties have agreed to make the findings binding) of the dispute within three weeks for a fixed fee.
Increased protection for whistleblowing: Amendments to the Swedish Company Act (Sw. aktiebolagslagen 2005:551)) to implement Directive (EU) 2019/1937 into national law will take effect from 17 December. The legislation will replace the Swedish Whistleblowing Act (Sw. lagen (2016:749) om särskilt skydd mot repressalier för arbetstagare som slår larm om allvarliga missförhållanden) and will extend the protection to cover not only employees but also job applicants, volunteers, trainees, individuals in managerial positions and certain shareholders, in private and public businesses.
Sustainable finance – EU green bond standard published: The European Commission published its legislative proposal for a regulation on European green bonds. The proposal is part of the EU’s wider agenda on sustainable finance and lays the foundation for a common framework of rules for issuers of bonds that voluntarily wish to use the designation ‘European green bond’ or ‘EuGB’ for bonds where the proceeds are used to finance green assets or projects that pursue environmentally sustainable objectives under the EU Taxonomy Regulation.
New capital adequacy rules for investment firms: The Swedish Financial Supervisory Authority (SFSA) (Sw. Finansinpsktionen) published and notified investment firms of new rules on capital adequacy in June. These rules came into force on 7 July 2021.
Banking Package 2021 – Amendments to CRR/CRD: In October, the European Commission published draft amendments to CRR and CRD. While the package primarily aims at ensuring greater resilience by EU banks against potential future economic shocks by finalising the implementation of the Basel III rules (also known as Basel IV), it is also intended to contribute to the recovery from the impact of Covid-19 as well as the transition to climate neutrality by integrating ESG risks in the prudential framework. Furthermore, it also strengthens supervision powers, inter alia, by establishing new harmonised rules for third country branches.
Read more here
EBA sees rapid growth in the use of digital platforms and identifies steps to enhance the monitoring of market developments: The European Banking Authority (EBA) identified a rapid growth in the use of digital platforms to ‘bridge’ customers and financial institutions; a trend expected to accelerate. New forms of financial, operational and reputational interdependencies are emerging and the EBA identified steps to strengthen supervisory capacity to monitor market developments.
Digital Euro Project: The European Central Bank gave the green light to the digital euro project. The investigation phase started in October and will last between two and three years. If the project goes smoothly, the Commission will adopt a regulation in early 2023, which would establish the digital euro and set out key design features.
New pre-marketing regime under AIFMD:The EU introduced a new AIFMD pre-marketing regime for alternative investment funds in August.
Takeover rules amended: Amendments to the Takeover Rules (Sw. Takeover-reglerna) issued by the Swedish Corporate Governance Board (Sw. Kollegiet för svensk bolagsstyrning) came into force pertaining to, inter alia, issuers on Nasdaq Stockholm and Nordic Growth Market NGM. The amendments include inter alia that a bidder may not condition a bid on the target company’s future financing and clarify that arrangements rendering financial exposure to a bidder corresponding to a shareholding in the target company are subject to the pre-transaction rules (Sw. föraffärsreglerna) and that such arrangements may in certain cases be non-compliant with good practice in the stock market if they imply a circumvention of the mandatory bid rules
Swedish bank found in breach of the Rulebook in Nasdaq disciplinary process: A major Swedish bank was fined 12 annual fees, an aggregate of SEK 46,575,000, after having been found to have breached the Nasdaq Stockholm Rulebook in a disciplinary process by the stock exchange in its decision 2021:03. The Nasdaq Stockholm Disciplinary Committee found that the bank had not handled well-known shortcomings in its processes and routines for anti-money laundering as required under the Market Abuse Regulation (EU) No 596/2014 (MAR). The committee also found that the bank had not handled information relating to suspected money laundering in its Baltic branch as inside information, which the committee considered a breach of MAR. The bank had previously received a warning and a substantial fine from the Swedish Financial Supervisory Authority.
New law prohibiting unfair trading practices in the agricultural and food supply chain: A new law prohibiting unfair trading practices between businesses in the agricultural and food supply chain implementing the EU Directive 2019/633 came into force. The Swedish Competition Authority (Sw. Konkurrensverket), the supervisory authority, may conduct unannounced inspections and compel individuals to appear at hearings. Sanctions in case of a breach include penalty fines or fees of up to 1% of the buyer’s annual turnover. The Swedish implementation has a wider scope than the EU directive and in certain cases goes beyond the minimum requirements set out. The new law also applies to agreements entered into before the law came into force.
Key contacts for Sweden
For more information, please speak to one of the key contacts below
Explore our Year to Come 2022 and Year in Review 2021 series across 20+ jurisdictions and a number of legal topics.