How does a share issue in Euro or USD work?

Sometimes we are asked to help out with share issues that are priced in Euro or US dollars (USD). Is that even possible in a Swedish company, and if so, how? And is it a good idea anyway?

We will go through it is this article.

The answer to the first question is “yes” – it is possible to set the price for a share issue in another currency, even if your company – like most Swedish companies – has the Swedish Krona as its accounting currency. However, doing so requires a little more work. Therefore, consider if it really is necessary. You can still negotiate the price of a share issue in for example Euro, but then at some point fix the exchange rate. This is what we recommend, and we describe how you do that in this article.

If you have decided to do the share issue in a different currency regardless, then start by opening up a bank account in that currency. Theoretically, you could do a share issue in Euro or USD where the money is deposited to a SEK-account, but this will invariably lead to problems with the exchange rate, especially if there are multiple investors. In that case, you risk that the price per share will differ, depending exactly which exchange rate each investor got (it is unlikely that everyone gets exactly the same exchange rate).

Create a currency account

Keep in mind that when you create a bank account in a different currency, you will get questions about what the purpose is. Since the work against money laundering has intensified in the past few years, all transactions involving other countries have gotten more complex. So be prepared to explain to the bank who all the foreign investors are and from where they got the money that they are investing. For that reason, setting up a foreign currency account may take some extra time.

When the new bank account is in place, you need to inform the investors how they are going to pay. The exchange rate is no longer a problem, since they pay in the same currency as your bank account. But it is important that the investors pay all fees i connection with the transfer, both the sending fees and the receiving fees. If they don’t, you may end up with too little money in the bank account, which in turn means that you will not receive a bank certificate with the right amount. The bank certificate needs to be precise.

SEPA payments to the rescue

Making payments in Euro is more convenient in this regard, especially if the investors are from the EU. Within the EU (and some other countries such as Switzerland and Norway), the banks have to offer “SEPA-payments”. “SEPA” stands for “Single Euro Payment Area” and SEPA-payments are often free and are settled relatively quickly.

Exchange Rate

Last but not least, you need to state the exchange rate used. We would suggest that you use the exchange rate on the day that the bank certificate is issued. Bolagsverket (the Swedish company registration office) needs the exchange rate in order to verify that the price per share is not lower than the quota value (which is seldom a problem, but needs to be verified) and to record the total amount the company has received.

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