Swedish SICAVs – a FAB Idea?

On 10 December 2025, the Swedish government published a new legislative proposal for a Swedish OEIC Act (Sw. fondandelsbolagslagen), presented by the Fund Market Inquiry (Sw. Fondmarknadsutredningen) in Fondandelsbolag – för en mer konkurrenskraftig fondmarknad, SOU 2025:117 (the Proposal). The Proposal aims to further strengthen the competitiveness of the Swedish fund market by introducing a new corporate form – the OEIC – referred to in Swedish as fondandelsbolag or FAB.

The Proposal envisages that the legislation will enter into force on 1 July 2027.

Unlike certain other European jurisdictions, Sweden currently lacks a dedicated corporate form specifically designed for investment funds. Swedish UCITS and special funds (Sw. specialfonder) may currently only be established as contractual funds governed by the Swedish UCITS Act and the Swedish Alternative Investment Fund Managers Act (AIFMA), respectively.

Other types of alternative investment funds are commonly established using existing corporate or partnership structures, most notably as Swedish limited liability companies (Sw. aktiebolag). Funds may also be formed as limited partnerships (Sw. kommanditbolag) or economic associations (Sw. ekonomisk förening). However, none of these structures are purpose‑built for collective investment undertakings.

Swedish limited liability companies are, by default, closed‑ended vehicles. While it is possible to replicate certain open‑ended features through the use of debentures, profit‑participating loans or similar instruments, such debt‑based solutions may be disadvantageous for certain investors, particularly from a tax perspective.

Against this background, the introduction of a more flexible, fund‑specific corporate form is expected to provide Swedish fund managers with a broader range of structuring options.

Under the Proposal, an OEIC may only be established as either (i) an investment company (Sw. investeringsbolag) governed by the Swedish UCITS Act, or (ii) an AIF company (Sw. AIF‑bolag) governed by the AIFMA. OEICs may not have any employees and may only conduct business as collective investment undertakings in accordance with the applicable fund legislation.

The name of an OEIC must include the term fondandelsbolag or the abbreviation FAB, followed by either “investeringsbolag” or “AIF‑bolag”, depending on whether the fund qualifies as a UCITS or an AIF.

In many respects, OEICs resemble Swedish limited liability companies, and several provisions of the Swedish Companies Act (Sw. aktiebolagslagen) will apply also to OEICs, including the rules on company groups (Sw. koncerner), shares and shareholders, as well as the obligation to register with the Swedish Companies Registration Office. Unlike contractual funds and limited liability companies, an OEIC must have a board of directors consisting of at least three members, of which a majority shall be independent from the manager. As for limited liability companies, the general meeting will be the ultimate decision‑making body of the OEIC.

An OEIC may issue shares in different share classes. This allows the manager to retain control over the fund by issuing a class of shares with enhanced voting rights. In Swedish limited liability companies, the maximum difference in voting rights between share classes is ten‑to‑one. The Fund Market Inquiry proposes that no such limitation should apply to OEICs, thereby allowing for the creation of a form of “golden share” for the manager.

Investment companies may only be managed by an authorised UCITS management company (Sw. fondbolag), whereas AIF companies may only be managed by an authorised or registered (sub‑threshold) AIF manager. In contrast to certain other AIF structures, OEICs may not be internally managed and must therefore appoint an external manager.

Furthermore, investment companies governed by the Swedish UCITS Act and AIF companies authorised as special funds may consist of multiple sub‑funds. While investment companies must be open‑ended, AIF companies may be open‑ended, closed‑ended or semi‑closed, as determined by their articles of association.

According to the Proposal, investment companies governed by the Swedish UCITS Act and AIF companies authorised as special funds should be subject to the same tax treatment as UCITS and special funds established as contractual funds. This means that income generated within the fund should not be subject to taxation at fund level (although the funds are not tax transparent as such).

Swedish individual investors in OEICs authorised as UCITS or special funds are thus proposed to be taxed in accordance with the standard tax regime applicable to contractual funds, i.e. an annual standard yield tax whereby 0.4 per cent of the fund’s capital base is taxed at a rate of 30 per cent.

OEICs authorised as UCITS or special funds are also proposed to constitute eligible assets for Swedish investment savings accounts (Sw. investeringssparkonto or ISK). This implies that investments up to the applicable threshold, SEK 300,000 as of 1 January 2026 in aggregate across all ISK holdings, would be exempt from tax for Swedish individual investors. Amounts exceeding the threshold would be subject to taxation based on a notional yield calculated on the capital base, taxed at a rate of 30 per cent.

Other AIF companies, i.e. those that are not authorised as special funds, would be taxed similarly to Swedish limited liability companies. Accordingly, positive taxable profits at the level of the AIF company would be subject to Swedish corporate income tax at a rate of 20.6 per cent.

As a general rule, AIF companies investing in unlisted limited liability companies would be able to hold business‑related shares (Sw. näringsbetingade andelar) on the same terms as ordinary limited liability companies. Returns on such shares are generally exempt from tax.

For AIF companies that invest in debt instruments or minority stakes in listed limited liability companies that do not qualify for tax exemption, investment returns would (still) be subject to taxation at fund level.

Taxation would also occur at investor level in accordance with the rules applicable to shareholders in Swedish limited liability companies. In addition, AIF companies may issue debentures, profit‑participating loans and similar instruments, which may be more attractive to certain categories of investors.

AIF companies that are not special funds are proposed to be subject to the same withholding tax rules as limited liability companies. 

Interest in ELTIFs has historically been limited in Sweden. As of today, there are no Swedish ELTIFs registered with the Swedish Financial Supervisory Authority. The Fund Market Inquiry has explicitly stated that one of the objectives is to increase the attractiveness of Swedish ELTIFs. By introducing the OEIC structure, it would become possible to establish semi‑open or open‑ended Swedish ELTIFs that may be marketed to certain categories of non‑professional investors, i.e. retail investors who have successfully passed a MiFID II suitability assessment.

The Fund Market Inquiry also identifies taxation as a key factor in enhancing the appeal of ELTIFs. ELTIFs may invest in both liquid and illiquid assets, including listed and unlisted companies. While shares in unlisted limited liability companies generally qualify as business‑related shares and are therefore exempt from tax at fund level, shares in listed companies typically do not benefit from such treatment.

To address this issue, the Proposal introduces a rule whereby any shares in a limited liability company, an economic association, a UCITS or a special fund held by an ELTIF would be treated as business‑related shares and thus exempt from tax at fund level. However, this rule would only apply where the ELTIF is marketed to non‑professional investors and where, over time, a significant proportion of the fund is held by such investors. 

It should be noted that interest income received by an ELTIF would not be subject to any special tax exemptions and would therefore be taxed at fund level in accordance with general rules.

The Fund Market Inquiry further proposes that shares in ELTIFs marketed to non‑professional investors should qualify as eligible assets for Swedish investment savings accounts, thereby increasing their attractiveness for Swedish retail investors.

The Proposal represents an important step towards strengthening the Swedish fund market. While it remains to be seen whether OEICs will gain widespread acceptance, our assessment is that increased structural flexibility for Swedish fund managers is inherently positive and may have a favourable long‑term impact on the market.

Certain aspects of the Proposal may nevertheless warrant further consideration. For example, the Proposal introduces an obligation for members of the board of directors of an OEIC to report any material breaches of the applicable regulatory framework directly to the Swedish Financial Supervisory Authority. While it is natural that the board should act in the collective interest of the shareholders, UCITS management companies and AIF managers as well as the fund's auditor are already subject to extensive reporting obligations vis‑à‑vis the regulator. This additional requirement raises questions regarding the scope of the board’s liability and responsibilities and may reduce the willingness of qualified individuals to accept board appointments, potentially complicating the establishment of OEICs. The reporting requirement together with the requirement to have a majority of independent board members could make OEICs less attractive than contractual funds or Swedish limited liability companies. 

From our perspective, the proposed reforms relating to ELTIFs constitute one of the most compelling elements of the Fund Market Inquiry’s work. The combination of an open‑ended or semi‑open structure and a revised tax framework could, at least in theory, significantly increase the attractiveness of Swedish ELTIFs for both managers and investors. It will therefore be particularly interesting to observe whether these changes translate into a meaningful increase in the number of ELTIFs in Sweden in the coming years. However, the Fund Market Inquiry also makes it unnecessary complicated by requiring that ELTIFs shall have a significant proportion of non-professional investors over time for the special tax regime to apply. It's unclear what constitutes "significant proportion" and "over time". Furthermore, it could be questioned why it is necessary to include this requirement as this is not a requirement for UCITS or special funds.

In 2018, Denmark introduced a comparable investment company with variable share capital, known as the AIF‑SIKAV. However, the market adoption has been quite limited in Denmark with less than ten AIF-SIKAVs currently registered with the Danish Financial Supervisory Authority. AIF-SIKAVs have primarily been used as fund-of-funds structure by certain local credit institutions and asset managers in respect of illiquid asset classes. In comparison, the Danish capital associations (Da. kapitalforeninger) has seen a broader adoption in the market, especially for liquid assets (financial instruments) and hedge-fund structures as the Danish capital association format is quite similar to UCITS but without the investment/diversification restrictions. 

It could be noted that Norway has no legal framework for investment companies with variable share capital, and there are no initiatives to introduce this today. This means that Norway now risks becoming even further disadvantaged as a fund jurisdiction in comparison with its Scandinavian peers.