The board of directors is responsible for the company's organisation and the management of the company's affairs. The very wide decision-making competence that the law grants to the board is limited in relation to the shareholders’ meeting primarily by the legal provisions that give the shareholders’ meeting exclusive decision-making power on certain issues, for instance regarding amendments to the articles of association, election of the board and auditors and approval of the balance sheet and income statement.
In its governance role, however, the board is obliged to comply with any provisions that may have been passed by the shareholders’ meeting, provided that the provision in question does not conflict with the Companies Act or the company’s articles of association.
The board may delegate tasks to people within or outside the board but not take the ultimate responsibility for the organisation and governance of the company or the obligation to ensure satisfactory supervision of the company's financial state. In any delegation of tasks, the board is obliged to act with care and to continuously ensure that the delegation of the task is sustainable.
The board of directors is to establish written rules of procedure for its own work. If there is a division of tasks among the members of the board, this must also be stated in the rules of procedure. This occurs, for example, if there is a committee on the board that is charged with preparing issues within a certain area, such as an audit committee. The board of directors may also delegate decision-making rights to such a committee, but the board cannot relinquish responsibility for any decisions made on the basis thereof.
The board of directors is to consist of no fewer than three members, of which one is to be appointed chair of the board. The chair has a particular responsibility to lead the work of the board and ensure that the board fulfils the tasks stipulated in the legislation.
The currently applicable listing requirements of OMX Nordic Exchange Stockholm state that no more than one of the board members elected by the shareholders’ meeting may also be a member of the company’s executive management or the management of one of its subsidiaries. This place is usually taken by the chief executive officer. Many companies, however, do not have any members of the company management on the board.
Boards of Swedish listed companies thus consist largely of external or non-executive directors. Further, the same stock exchange rules stipulate that a majority of the members of the board members must be independent in relation to the company and its management. At least two of these must also be independent in relation to the company's major shareholders. The latter means that it is possible for larger owners of Swedish listed companies to appoint a majority of the board with people who have close ties to these owners. This is in line with the positive view of an active and responsible ownership role that is expressed in the law's preparatory texts.