Powers of Attorney – Appendix 4

Sverige

Mechanical enforcement of the SHA's key exit mechanisms. A valuation floor protects the minority, and escrow with authority fallback at the County Administrative Board secures the purchase price in a dispute.

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What this appendix does

Appendix 4 contains the irrevocable powers of attorney that each shareholder grants to the Chair of the Board and the CEO. The powers of attorney make it possible to mechanically enforce the shareholders' agreement's key exit mechanisms – drag-along, Bad Leaver buy-back and share-ledger registration – even if a shareholder refuses to cooperate.

To protect the minority against abuse, two mandatory safeguards are built in: a valuation floor below which the power of attorney is invalid, and an exhausted matching right (ROFR) with a 30+60 day financing window. In a dispute, the purchase price is deposited with an independent escrow agent, with an authority fallback to the County Administrative Board.

When do you need Appendix 4?

You need this if…

  • The shareholders' agreement contains drag-along and you want to be able to enforce a majority sale without a minority being able to block
  • You have vesting and Good/Bad Leaver provisions that must be enforceable quickly
  • The company wants the right to administer the share ledger and handle share certificates mechanically
  • You want to protect a future exit from being blocked by a single refusenik

You probably don't need this if…

  • The shareholders' agreement has no drag-along, vesting or leaver provisions
  • All shareholders are operational and are always expected to cooperate on exit

What the appendix contains

The agreement covers the following areas.

Basic terms

  • Irrevocable under Chapter 2, § 5 of the Swedish Contracts Act
  • Valuation floor in SEK that blocks drag-along below the threshold
  • Escrow agent or fallback to the County Administrative Board
  • Dual representation permitted for mechanical enforcement

Drag-Along power of attorney

  • Two cumulative validity conditions (floor + exhausted ROFR)
  • ROFR with 30-day notice + 60-day financing window
  • Escrow deposit of the entire purchase price in a dispute

Bad Leaver buy-back and share-ledger administration

  • 'Buy first, dispute later' principle with escrow security
  • Registration under Chapter 5 ABL and share certificates under Chapter 6 ABL
  • Dispute appendix to the share ledger blocks good-faith acquisitions

Important to consider

  1. The valuation floor should be set deliberately high (often 2–5x the latest valuation) to protect the minority
  2. The escrow agent should be a specific bank or law firm with a client funds account
  3. If the escrow agent is empty or refuses KYC, an authority deposit at the County Administrative Board is activated automatically under the Act (1927:56)
  4. Two witnesses per shareholder are required under the formal requirements in the signature block
  5. The indemnity for the Chair/CEO falls away on gross negligence – personal liability under Chapter 29 ABL is activated

Legal basis

The powers of attorney are irrevocable within the meaning of Chapter 2, § 5 of the Swedish Contracts Act (1915:218), for as long as the shareholder is bound by the shareholders' agreement. This makes them stronger than ordinary powers of attorney that can be revoked at any time.

The escrow fallback is based on the Act (1927:56) on the deposit of money with an authority, ensuring that the purchase price can always be secured even if the parties cannot agree on a private escrow solution.

Create Appendix 4 and ensure the shareholders' agreement's exit mechanisms can actually be enforced.

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Common scenarios

Exit with an unwilling minority

85% of the shares accept a VC-driven exit. The sole minority refuses to sign the transfer agreement. The drag-along power of attorney allows the Chair to sign in the minority's name – provided that the valuation floor has been passed and the ROFR deadlines have expired.

Bad Leaver with a valuation dispute

A founder is dismissed for fraud. The shares must be repurchased quickly to clean up the cap table. Appendix 4 lets the company transfer the shares immediately, while the redemption amount is locked with the escrow agent until the dispute over the calculation is resolved.

Share-ledger appendix during an ongoing dispute

A transfer is carried out by power of attorney while a dispute is ongoing. The attorneys must draw up an official appendix to the share ledger with a warning that title is subject to dispute – this blocks future good-faith acquisitions.

Frequently asked questions

Can a shareholder revoke the power of attorney?

No. The power of attorney is irrevocable under Chapter 2, § 5 of the Swedish Contracts Act for as long as the shareholders' agreement applies. An attempted revocation constitutes a material breach of contract.

What happens if the valuation floor is not reached?

The power of attorney is entirely invalid. A buyer relying on the document cannot base good faith on it and does not become a lawful shareholder.

Are two witnesses really required?

Yes, under the formal requirements in the appendix's signature block. This ensures the power of attorney holds up in a future court review.

What if the escrow agent refuses KYC?

Then the authority fallback is activated automatically. The purchase price is deposited with the County Administrative Board under the Act (1927:56), so the dispute can be resolved without the deal being stopped.

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