Contingency balance sheet – implementation, questions and answers

Fact-checked: October 1, 2026 · Swedish law

A "kontrollbalansräkning" (statutory balance sheet for liquidation purposes) is not a voluntary internal quality check of the bookkeeping. It is a specific balance sheet that the board of directors of a limited company must act upon when any of the situations in Chapter 25, Section 13 of the Swedish Companies Act is met. Here is a practical walkthrough of the process and answers to the most common questions.

When must a statutory balance sheet be prepared?

The obligation lies with the board of directors. The threshold is not that it has been definitively established that the capital is depleted. It is sufficient that there is reason to assume that the company's equity, calculated according to the rules for a statutory balance sheet, is less than half of the registered share capital.

The second statutory situation is that enforcement under Chapter 4 of the Enforcement Code has shown that the company lacks assets for full payment of the distrained debt.

Also read our in-depth article: When is a statutory balance sheet required? Rules and examples.

How does the process work?

1. Identify the warning signal. The board monitors the company's financial position and assesses whether Chapter 25, Section 13 of the Swedish Companies Act has been triggered.
2. Prepare the statutory balance sheet immediately. It must be based on applicable Annual Accounts Act legislation but may include the specific adjustments permitted by Chapter 25, Section 14 of the Swedish Companies Act.
3. Have the company's auditor review it, if the company has an auditor.
4. Assess the result. If the statutory balance sheet shows that equity is less than half of the registered share capital, the board must convene the first general meeting for control purposes as soon as possible.
5. First general meeting for control purposes. The meeting decides whether the company should go into liquidation.
6. Possible reflection period. If business continues, a second general meeting for control purposes may need to be held within eight months from the first one.
7. Restore the entire share capital. At the second general meeting, the goal is not just to reach above half of the share capital. The new statutory balance sheet must show that equity amounts to at least the full registered share capital for the obligation to liquidate to cease on that basis.

For a step-by-step guide, see How is a statutory balance sheet prepared?.

Must an auditor review the statutory balance sheet?

The Swedish Companies Act states that the board shall have the company's auditor review the statutory balance sheet. If the company has an elected auditor, the auditor must therefore be involved in accordance with the rules. A private limited company that legally lacks an auditor naturally has no company auditor to conduct the review. It is therefore important to distinguish between companies with and without an auditor in the practical process.

The auditor's role is not to "approve" the business decision regarding whether the company should continue. The auditor reviews the statutory balance sheet and issues an opinion; the decision on continued operations or liquidation is handled according to the rules of the Swedish Companies Act.

When are the first and second general meetings for control purposes needed?

If the first statutory balance sheet shows that equity is less than half of the registered share capital, the board must convene the first general meeting for control purposes as soon as possible.

If the statutory balance sheet presented there does not show that the equity at the time of the meeting amounts to at least the full registered share capital and the meeting does not decide on liquidation, the matter must normally be re-examined at a second general meeting for control purposes within eight months from the first general meeting for control purposes. This is an important distinction compared to the common but incorrect phrasing that the eight-month period is calculated from the first statutory balance sheet.

When can personal payment liability arise?

According to Chapter 25, Section 18 of the Swedish Companies Act, board members can become jointly and severally liable for the company's obligations if the board neglects certain actions, such as preparing a statutory balance sheet, convening the first general meeting for control purposes, or applying for liquidation when required by law.

Frequently asked questions

Is a statutory balance sheet the same as an ordinary balance sheet?

No. It is based on the accounts but has a specific purpose according to the Swedish Companies Act and allows for certain specific valuation adjustments. Read how items may be valued in a statutory balance sheet.

Must the statutory balance sheet be sent to the Swedish Companies Registration Office?

The statutory balance sheet is not an annual report that is routinely sent to the Swedish Companies Registration Office (Bolagsverket). However, it is central to the statutory capital shortfall process and may be significant in later legal proceedings. Documentation should therefore be traceable and well-substantiated.

Can a shareholder contribution restore the capital?

A correctly executed capital contribution can affect the company's equity, but how a contribution is structured, accounted for, and potentially conditioned must be assessed separately. The capital shortfall process does not end just because money is deposited; the company's position must be proven according to the rules.

How are valuation adjustments documented?

Adjustments according to Chapter 25, Section 14 of the Swedish Companies Act must be reported separately. See our guide on supporting documents, notes, and appendices.

Sources and further reading

• Swedish Companies Act (2005:551), especially Chapter 25, Sections 13–20
• Swedish Accounting Standards Board – questions and answers about statutory balance sheets