What is a CEO (managing director) in a limited company?

A CEO, also referred to as a managing director, is the most senior operational executive responsible for the company’s day-to-day management under the board of directors’ oversight.

When is a CEO required under Swedish company law?

Public limited companies must have a CEO under the Swedish Companies Act, while appointing a CEO is optional for private limited companies.

What decisions can a CEO make, and what must the board decide?

The CEO may decide matters within the company’s ordinary day-to-day operations, while material decisions outside day-to-day management must be taken by the board of directors.

CEO

We clarify matters relating to the managing director, responsibilities, authority and corporate governance

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Glossary
CEO

Explained – what is a CEO?

A CEO, also referred to in the UK as a managing director, is the most senior operational executive in a limited company. The role carries responsibility for the company’s day-to-day management, subject to the overriding control of the board of directors under the Swedish Companies Act (2005:551). The CEO takes decisions concerning the company’s ordinary course of business and is responsible for executing the strategies, budgets and plans approved by the board. In many cases, the CEO works closely with a commercial lawyer to ensure compliance with applicable laws and agreements and to uphold good business practice.

For completeness, a concise managing director definition is: the senior executive charged with day-to-day management under the board’s oversight.

When does the question of appointing a CEO arise?

The question of appointing a CEO arises in any limited company where the board of directors appoints an individual to the role. Under the Swedish Companies Act, public limited companies must have a CEO, whereas it is optional for private limited companies. The CEO’s role becomes particularly central in capital raising, contracting with external parties and during major organisational changes that require clear leadership.

Illustration of managing director responsibilities: a laptop with business documents and a signed paper on a desk, representing executive governance, company law duties and corporate compliance.

Points to consider regarding the CEO

There are several important aspects that companies and boards should consider when appointing and engaging a CEO.

The board of directors is responsible for appointing and dismissing the CEO.
The CEO must comply with the Companies Act and the instructions determined by the board.
The CEO may only take decisions that concern the company’s day-to-day management.
Material decisions that fall outside day-to-day management must be taken by the board.
The CEO must report regularly to the board on the development of the business.
A CEO may incur personal liability if they breach the Companies Act or act negligently.
The CEO’s employment agreement should clearly set out responsibilities, authority and remuneration.

By clarifying the division of responsibilities between the board and the CEO, the risk of conflicts and legal issues is reduced.

CEO (managing director)

Why is the CEO important?

The CEO is central to a company’s organisation because they lead day-to-day operations and ensure the company achieves its business objectives. The role is therefore crucial for creating a functional balance between the board’s strategic decisions and operational execution.

The CEO also has significant responsibilities towards external stakeholders such as customers, investors and public authorities. By acting in accordance with laws and good business practice, the CEO builds trust in the company and strengthens its long-term stability. A capable managing director can also identify legal and commercial risks at an early stage and act proactively.

From both a business and trust perspective, the CEO is often the company’s public face. Professional, legally sound conduct therefore supports internal governance as well as the company’s brand and market position.

It means leading the day-to-day operations and implementing the board’s decisions.

Under the Companies Act, public limited companies must have a CEO, while it is voluntary for private limited companies. Many private companies nevertheless choose to appoint a CEO to ensure a clear division of responsibilities.

A CEO is responsible for the company’s day-to-day management and must always follow the board’s directions and the Companies Act. This includes, among other things, that the CEO must:

Comply with laws and the articles of association.
Implement the board’s decisions.
Report to the board on a regular basis.

The board is responsible for the company’s overall organisation and strategy, while the CEO is responsible for day-to-day operations. Put simply, the board sets direction and goals and the CEO executes them in practice.

The board appoints the CEO by formal resolution and may remove them at any time. It is important to regulate terms of employment, responsibilities and termination in a written agreement, often with support from a commercial lawyer to ensure correct handling.

The CEO is critical because they turn strategic decisions into practical action. The role is central to balancing the board’s long-term objectives with day-to-day operations. The CEO also serves as a link between internal and external stakeholders and is responsible for building trust through legally and commercially sound decisions. This includes:

Efficient management of the company’s resources.
Maintaining sound corporate governance.
Communication with investors and public authorities.
Risk management across legal and commercial matters.
Building long-term confidence in the company.

In practice, effective communication with investors is a core element of the CEO’s external role.

In UK usage, CEO and managing director are often used interchangeably; the managing director definition in this guide aligns with the legal position described above.