Pending changes to the Danish Export Controls Act: What you need to know
Mandatory firewall measures
If adopted, companies that are directly or indirectly owned or controlled by individuals or entities subject to sanctions must implement necessary measures (known as 'firewalls') to prevent the sanctioned person from exercising control over the company. This is referred to as "nødvendige foranstaltninger". The exact scope of such necessary measures remains unclear, but a series of examples are mentioned below.
Firewalls are a known concept across the EU where some Member States have already locally issued firewall verifications. EU-level guidance exists on firewalls in the shape of a document published by the Commission, but the pending Danish amendments will entail a more rules-based (rather than guidance-based) legal order.
The Danish Business Authority (Erhvervsstyrelsen) will have to approve such measures, and if a company does not voluntarily implement them, the authority can impose them by force. This means that in practice, a company subject to the scope of the proposed legislation can only lawfully continue its operations once the authority has approved the firewall measures.
What are "necessary measures"?
Necessary measures against a sanctioned owner of a company may include, but are not limited to:
- Suspension of the authority to instruct the company's employees and management
- Suspension of voting rights and signing authority
- Exclusion from the company's IT systems
- Exclusion from the company's physical premises/offices
- Preventing access to the company's funds and assets, including bank accounts, loans, receivables, benefits, etc.
- Necessary communication to all employees about the implemented measures
- Adequate communication to key business partners, including customers and suppliers
- Suspension of powers of attorney, including digital signatures
- Blocking or withdrawal of payment cards
- Cessation of salary payments and other forms of remuneration
It will always be a case-by-case assessment whether such measures, in any given combination, are sufficient in order for the Danish Business Authority to grant an approval.
Changes to ownership rights may create uncertainty
If an owner becomes subject to sanctions, the other owners' share of voting rights registered in the company's shareholder register or equivalent record will be increased proportionally by the sanctioned person's voting rights. The increase applies for as long as the relevant owner is sanctioned.
The proportional increase in voting rights may potentially result in another owner exceeding a threshold under the Danish Act on the Screening of Certain Foreign Direct Investments, etc. (the "Danish FDI Act", Investeringsscreeningsloven), potentially requiring prior authorisation for the increase if the other conditions in the Danish FDI Act are met.
The proposed legislation does not address this issue, thereby creating legal uncertainty as to how this situation should be handled.
Will 2026 continue where 2025 left off?
The new proposed legislation marks a continued political focus on ensuring adaptability to recent EU sanctions trends, especially in light of Danish Parliament having introduced even stricter penalties (strafferamme) for sanctions breaches under Danish jurisdiction adopted in 2025.
The proposal is currently under review and has been communicated via a public hearing set to expire on 29 January 2026. As a result, changes may be made following the hearing, so please note that specific details of this insight may subsequently be removed or amended in the final legislation if passed.
Need more information?
We follow the development of sanctions as well as the Danish FDI Act closely. You are welcome to reach out to one of our experts in these areas if you have any questions.
The proposal for the new sanctions legislation can be accessed via Høringsportalen. The existing EU guidance on firewalls can be accessed via the EU Commission's webpage.