Setting up business in Greenland
In order to conduct business in Greenland, local establishment and registration in the Greenlandic Business Register is required. This newsletter gives you the basic information regarding establishment of local Greenlandic subsidiaries and branches, including a description of the local domicile requirements for management, as well as basic information regarding residence and work permits.
In order to conduct business in Greenland local establishment and registration in the Greenlandic Business Register is required.
Sole proprietorships can obtain such registration if the owner holds a Danish citizenship or a Greenlandic residency-/work permit, and resides in Greenland. For partnerships, these conditions apply to all partners.
Foreign limited liability companies ("LLC") will have to establish either a subsidiary LLC or a branch office in Greenland subject to the conditions in The Danish Public Companies Act (in Danish "aktieselskabsloven") and the Danish Private Companies Act (in Danish "anpartsselskabsloven"). These acts have been extended to apply in Greenland, however be aware that the later collaborative Danish Companies Act of 11 April 2011 has not been extended to apply in Greenland.
Establishment of a subsidiary LLC in Greenland
A subsidiary LLC can be established either as a Public LLC (in Danish "aktieselskab") or as a Private LLC (in Danish "anpartsselskab"), where the major differences are the required share capital of DKK 500,000 vs. DKK 125,000 respectively, and that a two tier management is mandated for the Public LLC, while this is voluntary for a Private LLC.
The founder of the subsidiary can be any natural or legal person regardless of the founder's nationality or residence, but the actual management must reside in Greenland. The actual management is to be understood as where the day-to-day management decisions are made. For a two-tier managed company, this would usually entail that all members of the management board must reside in Greenland, but there is no obligation to appoint more than one member. For a one-tier managed company, all appointed members of management must presumably reside in Greenland.
The incorporated subsidiary LLC must be registered with the Danish Business Authority, as well as with the Greenlandic Business Register, before being legally able to conduct business in Greenland.
Establishment of a branch in Greenland
A branch office in Greenland can be established where either a Greenlandic company would be provided with a reciprocal right and/or where this is authorized by an international agreement. Permissions are currently only granted to LLC's registered in the Nordic Countries, the European Union, the United States of America and Canada.
The branch office must be registered with the Danish Business Authority, as well as with the Greenlandic Business Register. Furthermore, the requirement of actual management in Greenland must also be fulfilled, which entails that the registered branch manager must reside in Greenland.
The Greenlandic Act on Mineral Resources
The Act on Conducting Business in Greenland does not apply to activities covered by the Greenlandic Act on Mineral Resources. Licenses for preliminary studies and exploration can be granted to foreign LLC's without the need for a subsidiary LLC or a branch.
Licenses for exploitation are only granted to Public LLC's that fulfill the following conditions:
- Not taxed jointly with other companies, mandatory joint taxation excluded,
- Registered office in Greenland (general rule),
- Not more thinner capitalized than the group of companies in which the company is part,
- Trades at arm's length with in the company group,
- Requisite expertise and financial background in relation to the relevant exploitation activity, and
- Not in suspension of payment, bankrupt etc.
As the Act on Conducting Business in Greenland does not apply to activities covered by the Act on Mineral Resources, it is not a requirement that the actual management resides in Greenland.
Residence and work permit
Citizens of the Nordic countries are exempt from the general requirement to obtain visa, residence and work permits.
Citizens of any other country are required to apply for a residence and work permit with the Danish Immigration Service. The application must include an employment contract or a job offer regarding a full time position. Permits are usually granted within 3 months. Certain specific short term employments are exempt from residence and work permit requirements, but a visa is always required.
Our previous newsletter regarding the special circumstances relating to the Large-Scale Project Acts provide further details regarding staff for large projects.
Approval by the Greenlandic Local Counsel
For job positions soliciting unskilled labor, skilled labor and other certain specific qualifications, the employment of all foreign citizens, i.e. also Nordic citizens, are furthermore subject to the conditions in the Greenlandic Act on Labor Approach to ensure that Greenlandic citizens have a preferred right.
Approvals are granted by the Greenlandic Local Counsel, where the counsel has not been able to find suitable Greenlandic labor for the job in question within 14 days.
The Greenlandic Act on Labor Approach in Greenland does not apply to activities covered by the Greenlandic Act on Mineral Resources, and approval is consequently not required in that respect.
The Greenlandic Parliament is currently dealing with proposed amendments to the current Act on Conducting Business in Greenland regarding e.g. the provisions concerning residency, domicile and registered office.
It is uncertain whether and when the proposed amendments will enter into force.