Changes to the Danish Companies Act
On 1 July 2018, several amendments to the Danish Companies Act came into force. The new rules mean, among other things, a change in the capital requirement for public limited companies that previously was DKK 500,000 and that it is now possible to force redundancies for certain companies, which do not register the real owners.
Capital requirement for public limited companies
According to the old rules, a public limited company (A/S) would have a minimum share capital amounting to DKK 500,000. From 1 July 2018, the requirement for the minimum share capital was reduced to DKK 400,000. This reduction is due to the fact that the minimum share capital for Danish limited companies is one of the highest in Europe. With the reduction of the minimum share capital for Danish limited companies it is now more attractive and easier to establish public limited companies or to convert private limited companies (ApS) to public limited companies.
Since 1 March 2011 partial payment of the share capital has been possible (DCA article 33). The partial payment must correspond to at least 25% of the minimum share capital of the public limited company, which has been DKK 125,000. Due to the reduction of the minimum share capital for public limited companies from DKK 500,000 to DKK 400,000, the minimum amount for partial payment is now reduced accordingly to DKK 100,000.
However, the rules on sound capital adequacy (DCA article 115, item 5) remain unchanged, which means that it will depend on the company’s activity and financial situation if the new minimum share capital is adequate to fulfill the rules for sound capital adequacy.
Entrepreneurial companies (IVS)
Previously, an entrepreneurial company (IVS) could be re-registered to a private limited company (ApS) from the moment when the entrepreneurial company was sufficiently consolidated, i.e. when it had a share capital and equity capital of at least DKK 50,000. However, with the current rules, it is possible to depreciate other values than cash (deposit contribution) in the in connection with re-registration to a private limited company (ApS).
Registration of real owners
From 23 May 2017 public limited companies (A/S), private limited companies (ApS), entrepreneur companies (IVS), limited partnership companies (P/S, K/S) and a number of other companies have been obliged to register their real owners to the Danish Business Authority. The deadline for the registration was 1 December 2017. However, there are still several companies that have not fulfilled this obligation.
Therefore, on 17 May 2018, the Danish Parliament adopted new rules to the Danish Companies Act regarding the registration of real owners. According to the new rules the registration of a legal entity with the Danish Business Authority now requires, that the real owners of the legal entity are registered at the same time. This means that information regarding the real owners must now be obtained before registering the legal entity with the Danish Business Authority.
Additionally, the Danish Business Authority now has the opportunity to request the Danish Bankruptcy Court to dissolve a company subject to the obligation of registering the real owners, if the company has not fulfilled the obligation.
Conversion of companies and associations with limited liability to public limited companies (A/S)
Formerly, it was only co-operative societies with limited liability (A.M.B.A.) that could be converted directly into a public limited company (A/S). However, from 1 July 2018, all companies and associations with limited liability that are covered by the Danish Act on Certain Commercial Undertakings, meaning associations with limited liability (F.M.B.A.) and companies with limited liability (S.M.B.A.), can be converted directly into public limited companies (A/S) without initially having to be converted into a co-operative society with limited liability (A.M.B.A.).
Other changes of the Danish Companies Act
Lastly, the former directors and auditors of companies in case of forced resolution were required to physically attend in court. However, the Court can now decide that court meetings are held using telecommunication (with or without image) instead of physical attendance in court, if the bankruptcy court finds it appropriate.
For further information, please do not hesitate to contact LEAD – Rödl & Partner, Lawyer and Partner Alexandra Huber.
+45 5116 7494