Due to illness, depression, and exhaustion, the company’s annual report was prepared five months late.

The company had engaged external accounting assistance, and the board member normally ensured that all relevant materials were submitted to the accounting consultant on a monthly basis. However, during the summer of 2016, the board member was unable to manage company affairs due to illness. In early 2017, the board member was hospitalised for a period and has been on sick leave ever since. The company’s deputy, who was also involved in the business, assisted with many of the board member’s duties but lacked the expertise to manage the overall operations. Consequently, bookkeeping fell behind, and the annual report was eventually prepared on 30 November 2017, about five months late. Due to his illness, the board member was unaware of how or by whom the annual report was ultimately prepared.

The prosecutor pressed charges alleging accounting offences.

The board member argued that, as he was unable to manage the company due to his illness, neither he nor the company should be held liable for the delay.

The District Court acknowledged that the board member’s illness influenced the case but held that it did not exempt him from responsibility for the accounting offence. The court ruled that, objectively, upon becoming incapable of handling the company’s affairs, the board member should have sought assistance to ensure the company’s obligations were fulfilled, rather than withdrawing. It was this failure that constituted negligence. However, the court found that the negligence was not significant, and thus the offence was classified as minor. The board member was sentenced to probation, and the company was fined SEK 25,000. The prosecutor appealed the decision.

The Court of Appeal found that despite the board member’s genuine health issues, which were not disputed, he was fully aware of the substantial risk that the annual report would not be filed on time. By his conduct, he at least acted with recklessness regarding whether the filing would occur. Therefore, the court determined that he had intent with respect to the late submission.

Although the annual report was eventually submitted, it was nearly five months late, well beyond the 1 July 2017 deadline. The late filing was entirely independent of the board member’s actions. The offence was therefore classified as a regular accounting offence. The Court of Appeal increased the company fine to SEK 50,000 but upheld the probation sentence without a fine for the board member.

This ruling highlights the stringent obligations placed on company boards in Sweden to ensure timely preparation and submission of annual reports without significant delay.