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Activities covered by the Investment Screening Act

Danish Business Authority

Authorisation or notification of foreign direct investment

Investment screening in Denmark is performed according to a two-part model consisting of a sector-specific authorisation requirement and a universal voluntary notification option.

Foreign direct investments

The Investment Screening Act covers foreign direct investments in Denmark. 'Foreign direct investments' are defined as gaining control or significant influence over a company or entity domiciled in Denmark by direct or indirect possession of or control over the shares or voting rights in the company or equivalent control by other means, including the purchase of assets and long-term loans. Foreign direct investments include investment in a new company being established in Denmark in a particularly sensitive sector, where similar control or significant influence is achieved.

Control or influence gained from an investment can be direct or indirect, i.e. control can be exercised through other companies and through several countries, known as 'ownership chains'.

The Act covers not only the acquisition of shareholdings or voting rights in a company or entity, but also if similar control is achieved by other means. I.e. if, in other ways than by acquiring voting rights, similar control or significant influence is achieved, e.g. by agreement-based control and influence, by purchasing assets in the Danish company or by long-term loans.

There will be similar control by other means if the foreign investor directly or indirectly gains control or significant influence in a Danish company or entity by:

  • Controlling voting rights by virtue of agreements with other investors, corresponding to at least 10% of the shareholding or voting rights

  • Power to make significant decisions on managerial, operational, financial and development matters in accordance with a statute or agreement, or via long and irrevocable loan agreements

  • Right to appoint or remove board members

  • Acquisition of all the assets in the Danish company or entity, or a significant part of the assets, or control over all or a significant part of the assets as a result of long-term and irrevocable leases

  • The existence and effect of potential voting rights, including warrants and call options on shares, must be taken into account when assessing whether a foreign investor obtains similar control by other means.

Authorisation or notification of FDI

Under the rules on the sector-specific permit requirement, foreign investors must obtain prior authorisation from the Danish Business Authority if the investment is in particularly sensitive sectors, and they will achieve at least 10% of the shareholding and voting rights or equivalent control by other means.

On the other hand, under the rules on notification, notification is voluntary for investments that will achieve at least 25% of the shareholding or voting rights or equivalent controls by other means, and where the investment may pose a threat to national security or public order.

Authorisation for foreign direct investments, etc.

Foreign investors must apply for authorisation from the Danish Business Authority if they intend to directly or indirectly acquire at least 10% of the shareholdings or voting rights in a company or entity domiciled in Denmark, and the Danish company or entity belongs to particularly sensitive sectors in relation to national security or public order.

Authorisation is also required if, instead of acquiring the ownership shares or voting rights, control of a Danish company is acquired by other means corresponding to at least 10% of the shareholdings or voting rights. Read more about control by other means under the section "Foreign direct investments" above.

The requirement for authorisation also applies if foreign investors, invest in establishing a new Danish company, known as 'greenfield investments'. This requirement applies if the Danish company's business area falls under particularly sensitive sectors, and if a foreign investor acquires at least 10% of the voting rights or shareholding when the company is established, or obtains equivalent control by other means. However, there are special exceptions for newly-established companies.

Learn more about greenfield investments and exemptions from authorisation requirements.

If you have previously received authorisation for an investment, you must reapply for authorisation for subsequent acquisitions, which means that your shareholding or voting rights in the Danish company will amount to 20%, 1/3rd, 50%, 2/3rds or 100% after the acquisition.

Foreign investors subject to authorisation requirements for foreign direct investment

The permit requirement for foreign direct investment in particularly sensitive areas applies to the following foreign investors:

  • Foreign nationals

  • Companies not domiciled in Denmark. The Act also applies if the foreign company has a permanent location in Denmark

  • Companies domiciled in Denmark that are a subsidiary or a branch of a company outside Denmark

  • Companies domiciled in Denmark if a foreign national or a company outside Denmark has control or significant influence over it

  • National authorities and government agencies in non-EU and EFTA countries, including public institutions and state-owned investment funds

  • Non-profit associations, non-profit organizations and similar legal entities outside the EU and EFTA

Danish companies and entities covered by the authorisation requirement

The authorisation requirement within particularly sensitive areas includes foreign direct investments in the following companies and entities in Denmark:

  • All commercial companies in Denmark regardless of organisational form.

  • Public authorities and institutions in the field of critical infrastructure, which constitutes one of the particularly sensitive sectors.

Explanatory note

'Companies' are defined as all commercial companies, regardless of organizational form.

'Domiciled' is defined as the place where the undertaking is registered or has its registered office.

The Investment Screening Act does not apply to Greenland and the Faroe Islands. However, investments made by companies domiciled in Greenland or the Faroe Islands are covered by the permit requirement if foreign nationals or companies from third countries have control over or significant influence over the company.

Notification of foreign direct investments, etc.

All foreign direct investments that meet the applicable conditions, i.e. with regard the foreign investors covered, and if the investment is above the threshold value of at least 25% can be notified, if it is thought that the investment could pose a threat to national security or public order in Denmark.

In practice, it can be difficult to assess whether an investment can pose a security threat.

You can always contact the Danish Business Authority's foreign investment and security team if you are in doubt about whether you should report an investment. The Danish Business Authority will be able to provide general guidance in this area, including being able to provide guidance on specific investments that clearly fall outside the rules on notification.

Among other things, it will be relevant to look at the decision criteria that the Danish Business Authority has to take into account according to the Investment Screening Act when the authorities have to assess whether an investment may pose a threat to national security or public order, e.g. whether a foreign investor is directly or indirectly controlled by a foreign government, foreign state bodies or foreign armed forces through ownership or significant funding, for example.

Planned and already completed investments can be notified

It is possible to provide notification of investments that have already been completed and planned. However, if the investment has already been completed, the Danish Business Authority can launch a detailed investigation if the investment could pose a threat to national security or public order for up to 5 years from completion of the investment.

Which foreign investors are subject to notification?

The notification rules cover the following foreign investors:

  • Foreign nationals with the exception of nationals of EU and EFTA countries

  • Companies domiciled outside EU or EFTA countries

  • Companies domiciled in Denmark and other EU or EFTA countries if the company is controlled by persons or companies from countries outside the EU or EFTA

  • National authorities and government agencies outside the EU and EFTA, including public institutions and state-owned investment funds

The rules on notification thus do not in principle apply to foreign investors if they are nationals of EU and EFTA countries or companies domiciled in the EU or EFTA. The rules on notification only apply when an EU- or EFTA-based company is under the control or significant influence of a third country outside the EU and EFTA, and that control corresponds to at least 25% of the shareholdings or voting rights.

Which Danish companies are covered by the rules on notification?

The rules on notification cover:

  • All commercial companies in Denmark regardless of organisational form.

Explanatory note

'Companies' are defined as all commercial companies, regardless of organizational form.

'Domiciled' is defined as the place where the undertaking is registered or has its registered office.

The Investment Screening Act does not apply to Greenland and the Faroe Islands. However, investments made by companies domiciled in Greenland or the Faroe Islands are covered by the permit requirement if foreign nationals or companies from third countries have control over or significant influence over the company.

FAQ

Updated 10.08.2021

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