Incorporation of the company
Lars Magnus Ericsson ran L M Ericsson & Co as an independent owner for the first 20 years, of which Carl Johan Andersson was his partner for the first ten. By 1896, the time had come to transform the firm to a limited liability company.
The business that had begun under modest circumstances in a 13 square meter kitchen had expanded dramatically to encompass stores, offices and branch offices throughout the world. It was impossible for Lars Magnus Ericsson to oversee operations in detail. In addition, he wished to relieve himself from some of his responsibilities so that he would be able to devote more time to Alby, the property that he had purchased the preceding year in Botkyrka south of Stockholm. Increasing capital was thus not the reason for incorporation.
The statutory meeting of the company was held on May 12, just a few days after Lars Magnus Ericsson’s 50th birthday. The new company was named Aktiebolaget L M Ericsson & Co. The share capital amounted to SEK one million, distributed among shares with a par value of SEK 1,000. The shares, which were owned by Lars Magnus Ericsson himself, constituted payment for the sale of all the company’s tangible assets, which included the properties on Tulegatan in Stockholm, production equipment, fittings, inventory, etc. However, the company’s accounts receivable and bank deposits, as well as some minor debts, were not included.
Initially, the new company occasionally lacked liquid funds. Lars Magnus Ericsson therefore invested his own funds in the company during the early years. He opposed extensive borrowing from external sources to raise capital.
Lars Magnus Ericsson, Carl Johan Andersson and Axel Boström were elected to the board of directors. At the first board meeting Lars Magnus Ericsson was appointed as both president of the company and chairman of the board.
Of the one thousand shares that he received, Lars Magnus Ericsson retained 900. The others were distributed among his oldest and most worthy employees. His former partner Carl Johan Andersson received 50. Gabriel Bildsten, Axel Kniberg and Axel Boström each received 5. Axel Boström was responsible for the expansive sales strategy of the 1890s and would later become the company’s new president. The remaining 35 shares were distributed among 28 other employees. One of these was Alma Lindberg, who supervised the coil winding department.
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