Mergers and acquisitions in Denmark are generally regulated by the Danish Companies Act along with special regulation on areas such as competition law, provisions on the rights of employees, intellectual property and tax etc. Furthermore, the acquisition of assets and shares is also governed by the Danish Sale of Goods Act.
The Danish Securities Trading Act stipulates a number of requirements that apply when one or more of the companies are publicly traded.
The Danish regulated markets and the alternative market places Nasdaq OMX Copenhagen A/S, Dansk AMP A/S and First North have issued a number of different rules which apply to companies with securities listed on the relevant market place along with general legislation concerning such companies.
Acquisition of shares or assets
An acquisition of shares usually means that liabilities and assets remain with the company. Thus, it is generally not necessary to obtain consent from suppliers, customers etc. unless specific “change of control provisions” exist in the relevant contracts or are otherwise provided for.
An acquisition of assets usually means that only the rights and liabilities agreed upon between the parties are transferred. Thus, it is generally necessary to obtain consent from suppliers, customers, etc.
A number of exceptions apply to these general principles, particularly with regard to employees who enjoy certain rights in connection with a takeover, whether this occurs as an acquisition of assets, shares or otherwise. An acquirer of assets will, for example, take over the liabilities towards employees.
The transaction structure, asset purchase or share purchase may have different consequences from a tax or accounting perspective.
Self-financing of a Merger or an Acquisition
Payment regarding an acquisition may be in the form of cash, assets, shares etc. and is generally not regulated under Danish law. The Danish Companies Act has a detailed set of rules regarding payment when merging two or more companies.
Danish companies regulated by the Danish Companies Act are generally prohibited from advancing funds, granting loans or providing security for a third party’s acquisition of the company’s shares or shares in its parent company.
Accordingly, “bridge loans” requiring the company to pledge its assets to an institution financing the acquisition are generally not possible in the event of an acquisition of shares, unless the procedure outlined below is used.
A Danish limited liability company may under certain circumstances grant loans or provide security in connection with the acquisition of shares in the company or its parent company if the money used for this are not bound, and an acceptable credit valuation of the receiving parties and approval from the general meeting have been obtained.
The acquisition of assets is not covered by the abovementioned prohibitions.
When merging two or more companies or acquiring another company, the deal will be scrutinised by the relevant authority if the companies’ turnovers and values are higher than the thresholds under Danish and EU merger control regulation. Before a deal can be finalised, the merger must be approved by the relevant authority.
Mergers, acquisitions or joint ventures with a permanent function of an independent undertaking must be notified to the Competition Council when the below thresholds are met, cf. Section 12 of the Danish Competition Act:
the aggregate annual turnover in Denmark of all undertakings involved is more than DKK 900 million and the aggregate annual turnover in Denmark of each of the undertakings concerned is more than DKK 100 million; or the aggregate annual turnover in Denmark of at least one of the undertakings involved is more than DKK 3.8 billion, and the aggregate annual worldwide turnover of at least one of the other undertakings concerned is more than DKK 3.8 billion.
For further information on merger control in Denmark, please see our description of Danish Competition Law.
The above does not constitute legal counselling and Moalem Weitemeyer Bendtsen does not warrant the accuracy of the information. With the above text, Moalem Weitemeyer Bendtsen has not assumed responsibility of any kind as a consequence of a reader’s use of the above as a basis of decisions of considerations.