Buying a Danish Business

Page 2. 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

[ww-shortcode-one-third boxed=”true” centered_text=”true” first=”true” ][/ww-shortcode-one-third]

[ww-shortcode-one-third boxed=”true” centered_text=”true” first=”true” ]A/S[/ww-shortcode-one-third]

[ww-shortcode-one-third boxed=”true” centered_text=”true” first=”true” ]ApS[/ww-shortcode-one-third]

[ww-shortcode-one-third boxed=”true” centered_text=”true” first=”true” ]Application[/ww-shortcode-one-third]

[ww-shortcode-one-third boxed=”true” centered_text=”true” first=”true” ]Middle-sized and large companies[/ww-shortcode-one-third]

[ww-shortcode-one-third boxed=”true” centered_text=”true” first=”true” ]Small and middle-sized companies[/ww-shortcode-one-third]

[ww-shortcode-one-third boxed=”true” centered_text=”true” first=”true” ]Registration[/ww-shortcode-one-third][ww-shortcode-two-third boxed=”true” centered_text=”true” first=”true” ]Must be registered at the Danish Commerce and Companies Agency[/ww-shortcode-two-third]

[ww-shortcode-one-third boxed=”true” centered_text=”true” first=”true” ]Capital Contribution[/ww-shortcode-one-third]

[ww-shortcode-one-third boxed=”true” centered_text=”true” first=”true” ]Min. DKK 500,000[/ww-shortcode-one-third]

[ww-shortcode-one-third boxed=”true” centered_text=”true” first=”true” ]Min. DKK 80,000[/ww-shortcode-one-third][ww-shortcode-one-third boxed=”true” centered_text=”true” first=”true” ]Liability[/ww-shortcode-one-third][ww-shortcode-two-third boxed=”true” centered_text=”true” first=”true” ]Limited to the value of shares subscribed[/ww-shortcode-two-third]

[ww-shortcode-one-third boxed=”true” centered_text=”true” first=”true” ]Management[/ww-shortcode-one-third]

[ww-shortcode-one-third boxed=”true” centered_text=”true” first=”true” ]Mandatory two-tier system with either a Board of Directors or a Supervisory Board of minimum 3 persons and at least one CEO[/ww-shortcode-one-third]

[ww-shortcode-one-third boxed=”true” centered_text=”true” first=”true” ]

Optional one- or two-tier systems with either

• one CEO or

• a Board of Directors and at least one CEO

[/ww-shortcode-one-third][ww-shortcode-one-third boxed=”true” centered_text=”true” first=”true” ]Accounting[/ww-shortcode-one-third][ww-shortcode-two-third boxed=”true” centered_text=”true” first=”true” ]Annual financial statements audited by an accountant[/ww-shortcode-two-third][ww-shortcode-one-third boxed=”true” centered_text=”true” first=”true” ]Tax[/ww-shortcode-one-third][ww-shortcode-two-third boxed=”true” centered_text=”true” first=”true” ]Corporate income tax rate of 25%[/ww-shortcode-two-third]

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 2 “Buying a Danish business”

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