Time for reform of Swedish credit security laws?
Swedish credit and security regulations remain anchored in principles dating back to the 18th century, while our Nordic neighbors have implemented progressive reforms that enhance financing opportunities and boost competitiveness. Recently, the Stockholm Centre for Commercial Law (SCCL) submitted a memorandum to the Swedish Ministry of Justice highlighting three critical areas where Swedish companies face unnecessary financing obstacles:
Restrictions on establishing perfected security over receivables and funds standing to the credit of bank accounts – Swedish companies are disadvantaged compared to companies in other countries where perfected security over bank accounts can be established without the borrower being cut off from dealing with the relevant receivable or bank account. In a number of cases where we have been advising, companies have opened accounts abroad in order to be able to give the sought after security over the relevant funds.
Register for movable assets that are the subject of security– Today, securing loans with movable assets is cumbersome and uncertain. A digital register would simplify financing for investments in machinery, infrastructure, and energy projects.
Clearer rules for enforcement of security – Current regulations are outdated and create unnecessary uncertainty in credit transactions and security enforcement.
RE:FI STHLM participated in a hearing preceding SCCL’s memorandum. SCCL’s initiative is an important one. As practitioners, we witness on a daily basis how these issues impact companies’ ability to borrow and invest. We welcome the memorandum and look forward to follow the continued developments and hope this initiative leads to legislative reforms that will strengthen Sweden’s competitiveness and facilitate financings and investments going forward.
