Mergers & acquisitions
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Moalem Weitemeyer Bendtsen Advokatpartnerselskab provides legal services to sellers and purchasers of and investors in small, medium-sized and large companies in Denmark and abroad, as well as to assisting banks in connection with all types of business ownership transfers.
To find out more, please review our FAQ.
How are mergers and acquisitions regulated in Denmark?
Mergers and acquisitions in Denmark are generally regulated by the Danish Public Companies Act (Aktieselskabsloven), the Danish Private Companies Act (Anpartsselskabs-loven) along with special regulation on areas such as competition law, provisions on the rights of employees, tax, etc.
Are there any additional requirements for listed companies?
The Danish Securities Trading Act (Værdipapirhandelsloven) stipulates a number of additional requirements.
Furthermore, OMX Nordic Exchange Copenhagen, Dansk AMP and First North have issued a number of different rules, which apply to companies with securities listed on the relevant stock exchange/market along with the general legislation concerning such companies.
Do the Danish regulations conform to the EU-regulations?
The Danish regulations conform to EU-regulations, thus, mergers and acquisitions can be effected in a number of ways, including - but not limited to - sale of a company’s assets, by merging the company with a new or an existing company or by acquiring the company’s branches or divisions.
Which precautions may a company take in order to avoid a takeover?
The Danish Companies Acts allow a company to take a number of precautions in order to avoid a takeover including the following:
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Limits to ownership and voting rights A company’s articles of association may limit the maximum number of shares a shareholder may own or the maximum number of votes a shareholder may exercise. Thus, a potential buyer is prevented from acquiring a majority of the outstanding shares or otherwise acquiring control of a company by exercising a majority of the votes on the company’s general meetings or assuming control of the company following such acquisition. |
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Right of first refusal A company’s articles of association and/or shareholders’ agreements entered into between shareholders may entitle existing shareholders to purchase shares offered for sale by other shareholders, before such shareholders may sell such shares to a third party. |
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Approval by the board of directors A company’s articles of association may stipulate that any share transfer must be approved by the company’s board of directors. |
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Share classes A company may divide its share capital into classes with different rights. However, no share may carry more than 10 times the voting rights of any other share of the same nominal amount, and all shares must carry voting rights. These restrictions do not apply to private limited companies. |
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Notification to the company as requirement for exercising votes In order for a shareholder to be entitled to exercise the voting rights carried by the company’s shares, the articles of association may require that the shareholder register his or her shares in the company’s register of shareholders. |
Is a shareholder required to notify the company of his or her shareholding?
A shareholder must notify the company if the shareholder acquires more than 5% of the voting rights and/or the nominal share capital exceeding DKK 100,000 in a public limited company.
The shareholder shall notify the company again once the shareholder acquires respectively 5%, 10%, 15%, 20%, 25%, 50%, 90%, or 100%, of the voting rights or 1/3 or 2/3 of the share capital and voting rights. The same obligations apply when the shareholder no longer owns such percentages.
If the shares are listed on a stock exchange/market, notice shall generally be given to the relevant regulated market as well as to the company, and the acquirer may be required to issue a takeover bid for the remaining outstanding shares.
May a majority shareholder redeem the shares of minority shareholders?
If a shareholder holds more than 90% of the shares and voting rights in a company, the shareholder may demand that the company’s remaining shareholders sell their shares to him. However, the consent of the board of directors of the company is required. Thus, the decision is made as a joint decision by the majority shareholder and the board of directors.
May a minority shareholder demand to have his or her shares redeemed by the majority shareholder?
If a shareholder acquires more than 90% of the shares and voting rights in a company, the remaining minority shareholders may demand that the majority shareholder acquires the minority shareholders’ shares.
How is a merger or an acquisition financed?
Payment may be in the form of cash, assets, shares, etc. and is generally not regulated under Danish law.
However, companies are prohibited from granting loans to finance the acquisition of shares issued by the company or shares in a parent company. In addition, companies are not allowed to make assets available or provide assets as security in connection with the acquisition of the shares of the 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.
The acquisition of assets is not covered by the abovementioned prohibitions.
What is the difference between acquisition of assets and acquisition of shares?
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 customers and suppliers, etc.
A number of exemptions apply to these general principles, particularly regarding employees that enjoy certain rights in connection with a takeover, whether this occurs as an acquisition of assets, shares or otherwise. For instance, liabilities towards employees are automatically taken over by the acquirer of assets.
Tax and accounting in relation to an acquisition of assets differ from an acquisition of shares in a number of ways.
Finally, it should be noted that the Danish Companies Act and the Danish Private Companies Act will be replaced by a new Companies Act. The date of coming into force is yet to be set.
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.