Securities LawDownload PDF version
The Danish regulation on securities law is highly influenced by EU directives such as the MiFID Directive, the Prospectus Directive, the AIFM Directive etc. Therefore, the activities on the Danish securities market have an international aspect, thus challenging the advisors of public listed companies to keep themselves informed of the most recent international trends in both national and international securities law on an on-going basis.
The legal Framework
The most important regulation governing Danish securities law consists of the Danish Securities Trading Act (in Danish: “Værdipapirhandelsloven”), the Danish Financial Businesses Act (in Danish: “Lov om Finansiel Virksomhed”) and the Issuer Rules of NASDAQ OMX Copenhagen A/S (“NASDAQ OMX Copenhagen”). These acts and rules are supplemented by a number of executive orders setting forth detailed provisions on particular subjects.
In addition to the above, the listed companies are governed by a set of guidelines establishing good corporate governance standards. These guidelines are based on a comply-or-explain approach. They are available in English here.
Securities Trading in Denmark
Most trading of listed securities such as stock, bonds, notes, derivatives and money market instruments is carried out on the regulated market Nasdaq OMX Copenhagen. Shares traded on NASDAQ OMX Copenhagen are issued electronically through VP Securities A/S, which also carries out registration of ownership and rights, clearing and settlement of transactions as well as other related services.
In addition to NASDAQ OMX Copenhagen, there is an alternative marketplace called First North. First North is an alternative marketplace for small growth companies seeking to raise capital on the Nordic and global financial markets. As it has its own set of rules, it has the advantage of providing such companies with the benefits of being on-market, but with less administrative burdens due to a more simple and flexible regulation than what applies to regulated markets. First North is a part of NASDAQ OMX Nordic.
Access to trading securities on Nasdaq OMX Copenhagen
Both Danish and foreign companies authorised to perform securities trading have access to trading securities on NASDAQ OMX Copenhagen. Furthermore, banks and other credit institutions, including the National Bank of Denmark, mortgage-credit institutions, stockbroker companies, investment companies etc. may trade securities on NASDAQ OMX Copenhagen. A prerequisite for such access to the market is that Danish and non-EU/EEA entities must obtain such authorisation from NASDAQ OMX Copenhagen. If an entity established in another EU/EEA country contemplates trading securities on NASDAQ OMX Copenhagen, it must obtain the authorisation from the relevant financial supervisory authority in its own home country and subsequently trade securities in another EU/EEA country.
Natural or legal persons who wish to trade securities on NASDAQ OMX Copenhagen, who themselves are not authorised to do so, may trade securities through an authorised entity such as a bank or another securities trader, as described above.
Requirements for admission to listing on Nasdaq OMX Copenhagen
The terms and conditions for admission for listing on NASDAQ OMX Copenhagen are set forth in the Danish Securities Trading Act and are supplemented by the Issuer Rules of NASDAQ OMX Copenhagen. It contains additional rules and requirements on the admission for listing, prospectuses and disclosure requirements for shares, unit trusts certificates and bonds.
In order to have securities admitted for trading on NASDAQ OMX Copenhagen, the issuer of the relevant securities must submit an application to the Danish FSA. In order for the Danish FSA to grant an authorisation to the issuer, the statutory requirements relating to the offer of securities must be met.
Prospectus Requirements under Danish Law
An issuer offering securities in Denmark may under certain circumstances become subject to an obligation to prepare a prospectus. Whether the issuer is subject to such duty depends on the nature and value of the securities offered by the issuer.
The requirements are set out in the Prospectus Directive which provides uniform rules for prospectuses regarding public offers of securities exceeding EUR 5 million and for prospectuses admitting securities for trading on regulated markets. When calculating the thresholds, the market price is the determining factor.
Mandatory and voluntary Takeover Bids
The Executive Order on Takeover Bids lays down the rules governing mandatory offers, voluntary offers, notifications of decisions to submit an offer, the contents of the offer document, which includes the offeror’s duty to disclose any intended payment of the target’s resources after completion of the offer, the prohibition against entering into agreements on bonuses or similar benefits with the target’s management, the offer price and approval and publication of the offer document.
Certain Requirements under Danish Law
Disclosure requirements under Danish law
Subject to the Executive Order on Major Shareholdings, a shareholder in a company having its securities traded on NASDAQ OMX Copenhagen must notify the Danish FSA and the issuer if the shareholding amounts to at least 5% of the issuer's voting rights or outstanding share capital (a major shareholder announcement). The notification must be given by the major shareholder at the day of trading. The issuer must within one trading day publish the major shareholder announcement.
Notification must also be given when the shareholding exceeds the thresholds of 10%, 15%, 20%, 25%, 50% and 90% as well as 1/3 and 2/3 of the total outstanding share capital at the day of trading.
If the shareholder holds voting rights pertaining to any shares held by a third party by way of agreement or pledge, and the total shareholding exceeds the threshold(s), the shareholder is also obligated to give notice.
Issuers of shares admitted to trading on NASDAQ OMX Copenhagen must prepare a set of internal rules in order to facilitate and ensure compliance with the disclosure duties and to prevent that inside information is selectively disclosed to third parties intentionally or by mistake.
Compulsory redemption of minority shareholders
If a shareholder holds more than 9/10 of the total outstanding share capital and a proportionate share of the voting rights in a company having its securities traded on a regulated market, the shareholder may decide to redeem the remaining minority shareholders. In such an event, the minority shareholders will become subject to a duty to transfer their shares to the majority shareholder within four weeks after notice of the redemption. If one or more of the minority shareholders challenge the offered redemption price, the Danish courts will appoint independent experts to assess the accurate redemption price.
A minority shareholder’s entitlement to have his shares redeemed
If a majority shareholder holds more than 9/10 of the total outstanding share capital and voting rights of a company, the minority shareholders have the right to request that such majority shareholder redeem the minority shareholders. Usually, the articles of association of the company will contain provisions setting forth the guidelines for fixing the redemption price in such an event. However, if there are no provisions in the articles of association regarding a minority shareholder’s right to have his shares redeemed, the Danish courts will appoint independent experts to assess the accurate redemption price.
Obligations to disclose inside information
An issuer of securities which are traded on a regulated market must as quickly as possible disclose inside information relating to the business of the issuer. The issuer is obligated to disclose such information immediately after the relevant issue has occurred or after the relevant event has taken place, even though the relevant issue or event has not yet been formalised. Furthermore, any material changes to information that has already been made publicly available must be disclosed immediately after the occurrence of such changes and through the same medium which was utilised when the information was originally disclosed.
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 or considerations.