The development of corporate governance internationally

To put the work of the Board and the Swedish Code in a broader context, here is a brief description of how modern corporate governance has grown from its emergence in the USA in the early 1980s until today.


The modern development of corporate governance began in the USA in the early 1980s. A number of powerful and high-handed boards and company management teams in large listed companies had been acting in ways that were regarded as being in conflict with the interests of the owners, which to a large extent were investment and pension funds investing the savings of the general public. This prompted leading institutional investors to intervene by asserting their power as owners more vigorously and formulating specific guidelines, known as corporate governance guidelines, for how companies were to be run.

During the 1990s and early 2000s, a number of mandatory rules and increasingly expansive legislation were introduced at the major American stock exchanges, primarily at the New York Stock Exchange and Nasdaq. One example was the Sarbanes-Oxley Act of 2003. However, the American approach has not led to the introduction of corporate governance codes as it has in Europe and other parts of the world. One of the reasons is probably that, as company legislation in America is largely a matter for the states, it has no federal legal framework. Another may be American society’s lack of confidence in "soft law" as a method of regulation compared with many other countries. 


In Europe, the breakthrough for corporate governance came with the Cadbury Report, which was published in the United Kingdom in 1992 in response to a number of recent British corporate scandals. The report introduced what became known as the comply or explain model, which has set the pattern for corporate governance codes in many countries. It was followed by several more reports that addressed various aspects of corporate governance in the British companies. The reports were compiled for the Combined Code, the first version of which was introduced for British listed companies in 1996 and has since been revised and updated several times.

During the latter part of the 1990s, national codes for corporate governance were introduced both in Europe and other parts of the world. In the Nordic region, the development started in Denmark in 2001, after which the other Nordic countries followed suit.

Within the European Union, work on modern corporate governance was initiated mainly with the action plan for company law and corporate governance in 2003. It was found that far-reaching harmonization of company law or codes for corporate governance was hardly possible or even desirable within the foreseeable future. Instead, the European Commission expressed its expectation of the introduction of national corporate governance codes in each member states, based on each country's legislation and other specific circumstances. Instead, the Commission’s work was limited to some particularly important corporate governance issues, with the aim of harmonizing the regulatory framework. Over the years, a large number of recommendations and directives on corporate governance have been issued by the Commission, many of which have been implemented in the member states through legislation. 


In Sweden, the Companies Act Committee, (Aktiebolagskommittén), was appointed in 1990 and given the task of reviewing and modernising the Swedish company legislation. The committee's work, which went on for fifteen years, led to the Swedish Companies Act which came into force on 1 January 2006.

In March 1993, the Swedish Shareholders' Association presented the first Swedish ownership policy, a collection of guidelines and recommendations for the ownership role in listed companies. This was followed by similar publications from several major Swedish shareholder institutions. ”The Volvo-Renault Affair”, where a planned merger between the two companies was stopped by major institutional owners, is usually seen as the first practical implementation of this new approach.

During the following decade, a number of rules, guidelines and recommendations on corporate governance were introduced by the self-regulatory bodies within the field of corporate governance, primarily the Swedish Securities Council and the Swedish Business and Industry Committee. Then, starting at the end of the 1990s, the Stockholm Stock Exchange introduced several rules of a corporate governance nature in its listing requirements.

In January 2003, the Swedish Academy of Board Directors presented its Guidelines for Good Practice for Directors, the first comprehensive code for the work of company boards in Sweden. In September of the same year, the Code Group, a joint working group for the National Commission on Business Confidence and a number of private-sector organisations, was appointed. Its task was to devise a national Swedish code for corporate governance. The group presented a draft proposal for the Swedish Code of Corporate Governance in April 2004. Following an open referral process, the Code Group published its final proposal in December of the same year. On July 1, 2005, the Code came into force for all listed companies on the Stockholm Stock Exchange's A-list and for companies on the O-list with a market value of more than SEK 3 billion, which at this time was around 70 companies.

In February 2005, the Swedish Corporate Governance Board was set up to monitor and analyse the application of the Swedish Code and, if necessary, make appropriate modifications and amendments. Three years later, the Board decided to conduct a major review of the Code with a view to broadening its application to all companies with shares traded on a regulated market in Sweden. On July 1, 2008, the Revised Swedish Corporate Governance Code was introduced for all Swedish companies whose shares are traded on NASDAQ OMX Stockholm and NGM Equity, a total of around 300 companies. See Revised Code 2008.

A second major revision of the Code came into force on 1 February 2010. 

The Code was revised again in 2015, effective from 1 November 2015.