When is a balance sheet for liquidation purposes required? Rules and examples
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Fact-checked: October 1, 2026 · Swedish law
The Swedish Companies Act specifies two situations in which the board of directors must immediately prepare a control balance sheet. The most common is when there is reason to assume that the company's equity has fallen below half of the registered share capital. The second applies to unsuccessful enforcement according to the Enforcement Code.
The two statutory situations
1. Reason to assume equity is too low
According to Chapter 25, Section 13, Paragraph 1 of the Swedish Companies Act, the board must immediately prepare and, if the company has an auditor, have the company's auditor review a control balance sheet when there is reason to assume that the company's equity, calculated according to Chapter 25, Section 14, is less than half of the registered share capital.
2. Unsuccessful enforcement
The obligation also arises when, during enforcement proceedings according to Chapter 4 of the Enforcement Code, it has been shown that the company lacks assets for full payment of the distrained debt.
What does “half of the registered share capital” mean?
The threshold is calculated based on the company's registered share capital. If the company has 25,000 SEK in registered share capital, the half-threshold is 12,500 SEK. If the company has 100,000 SEK in registered share capital, the threshold is 50,000 SEK. It is therefore not always the minimum capital for private limited companies that is relevant.
Furthermore, equity must be assessed according to specific KBR rules. Therefore, the ordinary balance sheet may be a starting point without being the final answer. Read more in Valuation of items in a control balance sheet.
Which signals can provide reason to assume capital deficiency?
The law does not provide an exhaustive list of warning signs. The board needs to make an actual assessment based on the company's financial information. Examples that may justify closer scrutiny include:
- large or recurring losses,
- significant impairment of assets,
- lost customers or contracts with a major impact on earnings,
- unexpected costs or damages,
- annual or monthly reports showing that equity is approaching the limit,
- other events that significantly worsen the company's capital position.
A liquidity crisis and capital deficiency are not the same thing. A company may have poor liquidity but positive equity, or vice versa. It is therefore important to assess the right question.
What is not automatically a statutory KBR situation?
The older version of this article cited mergers, acquisitions, bank demands, and general audit reviews as situations where a control balance sheet might be "required." This was misleading.
A company can, of course, voluntarily perform financial analyses before financing, restructuring, or ownership changes. However, such an internal analysis does not become a control balance sheet in the sense of the Swedish Companies Act just because one wants to check the finances. The statutory obligation is based on the conditions in Chapter 25, Section 13 of the Swedish Companies Act.
Practical examples
Example A – loss in a company with 25,000 SEK share capital
A newly started company has 25,000 SEK in registered share capital and reports, after several months of losses, a preliminary equity of 9,000 SEK. The information provides clear reasons to assume that equity is below 12,500 SEK. The board should then act according to KBR rules and not wait for the next ordinary annual report.
Example B – large surplus value in an asset
Current accounting shows equity below the half-threshold, but the company has an asset that may potentially be recognized at a higher value in the control balance sheet according to Chapter 25, Section 14. The board must still prepare a KBR when there is reason to assume capital deficiency; the special valuation is then performed in the actual control balance sheet.
Example C – payment problems but strong equity
A company has temporary difficulty paying a supplier but has clearly positive equity well above half of the share capital. Payment difficulties do not in themselves mean that Chapter 25, Section 13, Paragraph 1 is met. If, however, enforcement leads to the situation specified in Chapter 25, Section 13, Paragraph 2, the obligation may arise on that basis.
What happens after the obligation has arisen?
The board must act immediately. If the KBR then shows that equity is less than half of the registered share capital, the board must call the first general meeting for a review of the financial position (kontrollstämma) as soon as possible. If the process proceeds, a second meeting may need to be held within eight months of the first.
See the full process in How is a control balance sheet conducted? Step by step and calculation examples in How do you calculate a control balance sheet?.
For a private limited company without a chosen auditor, there is a Control Balance Sheet Template – Without Auditor (Excel) for 49 SEK. The template is a work tool and needs to be filled with the company's own correct data.
