Draft proposal for amendments to the Danish Companies Act, the Danish Financial Statements Act, etc. submitted for consultation

The proposals to accommodate the Danish Entrepreneurship Package 

On 21 June 2024, a broad political agreement was concluded on the Danish Entrepreneurship Package. Consequently, the Danish Ministry of Industry, Business and Financial Affairs has proposed amendments to the Danish Companies Act (DCA) to promote the goal of establishing Denmark as a world-class entrepreneurial nation.

The proposals apply to private limited companies (in Danish: anpartsselskaber), aiming to provide entrepreneurs with easier access to raise capital by letting private limited companies offer its shares to the public and reduce barriers to entry for those seeking to operate a business through a limited liability company. This would be achieved through an amendment to section 1(3) of the DCA, allowing private limited companies to raise funds through equity crowdfunding, and a revision of section 4(2) to lower the minimum capital requirement for private limited companies from DKK 40,000 to DKK 20,000.

The proposal to repeal the current provisions on shareholder loans

On 3 September 2024, the Danish Ministry of Industry, Business and Financial Affairs proposed to repeal sections 210-212 of the DCA governing financial assistance to shareholders, etc. (in Danish: kapitalejerlån).

The current regulation shifted the legal framework from an outright ban on shareholder loans to permitting such loans, subject to the fulfilment of a number of specific conditions outlined in the DCA and the Danish Financial Statements Act.

According to the consultation letter, repealing these conditions will result in greater ability to provide financial assistance solely subject to the limitations set forth in EU corporate law regulations.

Fundamental Danish corporate law doctrines still apply

It should be noted that the central management body remains liable for ensuring that the default Danish corporate law requirements (such as the corporate benefit doctrine) for providing financial assistance are met and that the company maintains adequate financial resources and sufficient liquidity in light of the company's financial position at all times in accordance with sections 115-118 of the DCA.

Additionally, management must ensure that no transaction unfairly benefits certain shareholders or others at the expense of the company or other shareholders (in Danish: utilbørlig fordel) as set out in section 127 of the DCA.

Non-compliance with the above general corporate law limitations may result in fines, pursuant to section 367(1) of the DCA.

The proposal to repeal the duty to report on policies and target figures for the underrepresented gender in management

At the time of the introduction of section 99b of the Danish Financial Statements Act, Denmark was considered a pioneer in promoting gender balance in management. However, in recent years, comprehensive EU regulations have been enacted to promote diversity and gender representation in business, which partially overlaps with this provision in Danish law.

The proposal to repeal section 99b of the Danish Financial Statements Act is intended solely to relieve companies of the obligation to report on these matters in their annual reports. Therefore, the companies concerned would still be required to establish policies and set target figures for their gender balance in management bodies, pursuant to, e.g., section 139c of the DCA.

The proposed amendments are currently draft proposals and are submitted for consultation with relevant stakeholders. The final draft bill is expected to be presented in November 2024, following which it can be formally introduced for readings in Parliament (Folketinget).

Want to know more?

If you have any questions, please contact Plesner's Corporate Law team.

Read the draft bill regarding private limited liability companies (in Danish)

Read the draft bill regarding financial assistance (in Danish)