Buying a Danish business

Buying a Danish business

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Page 2. Buying a Danish business.

Buying a Danish business

Organisation of management

A public limited liability company can choose to either have a board and a managing director or a supervisory board and a managing director. A private limited  liability  company  can  choose  to  either  just have the managing director or to have a board and a managing director. The board for a public limited liability  company  must  consist  of  at  least  3  board members. The private limited liability company can have a board of 1 or more members.

The managing director and the board would be responsible for the management of the limited liability company’s business and organisation. There are no mandatory  rules  regarding  the  frequency  of  board meetings. The board would be responsible for:

  • Issuing written instructions on how work is to be divided  within  the  board  and  between  the board and the managing director.
  • Ensuring that taxes are paid on time.
  • Ensuring that the annual accounts are prepared and filed with the authorities on time.
  • Reporting any changes of the information kept in the official registers.
  • Supervising business conduct by the managing director to be according to instructions from the board.
  • Ensuring fraud prevention.
  • Taking out the relevant insurances.

Authorisation

The  joint  board  of  directors  will  be  authorised  to sign on behalf of the company. The company can decide on the rule of signature for the company. The managing  director  can  often  sign  on  behalf  of  the company – possibly with a board member.

Role of the managing director

The board is to appoint a managing director.

The  managing  director  is  responsible  for  the  dayto-day  operations  of  the  company  if  not  otherwise  instructed by the board.

Personal liability A director or managing director would be liable for damages if, intentionally or negligently, they cause damage in performing their duties. The director or managing director may also be liable for any loss or damages suffered by a shareholder or other person by reason of a breach of the provisions of the Companies Act, the applicable annual accounts’ legislation or the memorandum and articles of association of the company. Any shareholder, who intentionally or by gross negligence, causes damage to the company, another shareholder or person by co-operating in the breach of the Companies Act, applicable annual accounts’ legislation or the memorandum and articles of association could also be held liable. If two or more persons were liable for the same damage, they would be jointly and severally liable.

Establishing a branch office

A branch office would be a part of a foreign company with its own independent administration in Denmark.  In  court  proceedings,  the  foreign  company would have identity with the Danish branch

The branch office shall be managed by at least one branch  manager,  who  would  be  responsible  for  all business activities. The branch manager would sign on behalf of the branch office and thereby the foreign company’s activities in Denmark. A branch office shall be registered with the Danish Commerce and Companies Agency (Erhvervs- og Selskabsstyrelsen).

The branch office shall keep its own accounts. The provisions governing bookkeeping and accounts for Danish limited liability companies would, with some exceptions, also be applicable to foreign branches in Denmark.

Personal liability in a branch office

The owner of a branch office would be personally liable for the branch office’s debts. Persons, including the branch manager, who are in breach of applicable laws may be liable for damages.

Corporate forms

A/S
ApS
Application
Middle-sized and large companies
Small and middle-sized companies
Registration
Must be registered at the Danish Commerce and Companies Agency
Capital Contribution
Min. DKK 500,000
Min. DKK 80,000
Liability
Limited to the value of shares subscribed
Management
Mandatory two-tier system with either a Board of Directors or a Supervisory Board of minimum 3 persons and at least one CEO

Optional one- or two-tier systems with either

•  one CEO or

•  a Board of Directors and at least one CEO

Accounting
Annual financial statements audited by an accountant
Tax
Corporate income tax rate of 25%

Buying a Danish business

Buying a Danish business

When  acquiring  an  existing  business  in  Denmark, you could either purchase its shares or its business assets. If the existing business is conducted through a  limited  partnership  (“kommandit-selskab”),  or  a branch office (“filial”) you can only acquire the business  assets. This  guide  will,  however,  have  its  emphasis on share purchases.

Transfer of shares

The ownership of shares would be transferred when the parties have entered a binding agreement on the transfer  of  shares.  In  order  to  exercise  ownership rights, the buyer shall receive the original share certificates and be entered as the registered owner of the shares in the company books.

Restrictions on transfer of shares

As  in  most  other  countries,  shares  may  be  freely transferred and there are no restrictions on foreign ownership of shares. The only permitted restriction on free transfer would be preemption rights where the  articles  of  association  provides  that  existing  shareholders  or  other  persons  shall  be  entitled  to purchase  shares  which  have  been  transferred  to a  new  owner. This  provision  would  be  common  in companies with few owners. Free transfer of shares may also be limited by an agreement made between the shareholders but these agreements would only be binding on the parties concerned. An acquisition, which is contrary to a contractual restriction on the transfer of shares, would not prevent the buyer from exercising his rights in the company.

Sell and purchase of shares by insiders

Denmark has extensive legislation, based on EU law, regarding  the  right  for  an  insider  to  sell  and  purchase shares. Generally, the regulations would apply to securities normally traded in an organised market place. The definition of an insider is wide and would cover, for example, directors, the managing director, executive employees and close advisors to the company. An insider who is in breach of the regulations may face a fine, imprisonment and the forfeiture of any financial gains.

Page 2Buying a Danish business

Read More. Go to:

  1. Establishing Business in Denmark
  2. Buying a Danish business
  3. Danish business with others
  4. Denmark Employment
  5. Property and Environment in Denmark
  6. Intellectual Property in Denmark
  7. Danish Business Environment
  8. Profit and tax in Denmark
  9. Denmark Company Liquidation
  10. Denmark company formation

 

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