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Activities covered by the Investment Screening Act

Danish Business Authority

Greenfield investments

Investments and agreements when founding new Danish companies

The Investment Screening Act not only covers foreign direct investments and special financial agreements with existing Danish companies, but also the founding of new companies (Greenfield investments).

Foreign investors under the regulation

Foreign investors subject to the law with intention to invest in the establishment of a new company or enter into a special financial agreement with such a company, authorisation is required in principle if it is a company, require authorisation in principle if the target company is within a particularly sensitive sector or activity and the requirements for acquiring control or significant influence are met. Learn more about particularly sensitive sectors and activities.

Authorisation requirement if you intend to invest in founding a new company

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

  • Foreign nationals

  • Companies that are 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 them.

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

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

Authorisation requirement if you intend to enter into a special financial agreement with a newly-established company

The authorisation requirement for special financial agreements in particularly sensitive areas applies to 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

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

Explanatory note

'Companies' are defined as all commercial companies, regardless of organisational 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, special financial agreements 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.

If, on the other hand, the company is not in a particularly sensitive sector or activity, then the investment or agreement is not covered by the Act and thus not by its scope. Greenfield investments outside particularly sensitive sectors and activities thus fall completely outside the Investment Screening Act.

Foreign direct investment in a newly-established company includes the subscription of share capital, an agreement on the supply of equity to the company and long-term loans to the company.

However, an exception has been made in the form of a de minimis limit, described in more detail below.

De minimis-exemption

Although an investment or agreement when founding a new company in a particularly sensitive sector or activity generally requires authorisation, such an investment or agreement may be exempt from the requirement for authorisation under the 'de minimis' rule. 

  • If the foreign investor's capital inflow to the new company does not exceed DKK 75 million in total for up to three financial years from foundation, and if the newly-established company is not a subsidiary of a foreign investor, the investment does not require authorisation. Under the same conditions, neither do special financial agreements with a newly-established company require authorisation, i.e. if the economic value of the agreement does not exceed DKK 75 million. 'Capital injection' is defined as the inflow of equity and long-term irrevocable loan financing.

The exception applies not only at the time of incorporation, but for up to three financial years from foundation, provided that the total capital injection does not exceed DKK 75 million. For example: DKK 10 million can be invested at foundation, DKK 20 million after the first financial year, and DKK 45 million in the third financial year, without having to apply for authorisation for any of those investments. Similarly, multiple special financial agreements can be entered into with the company in the first three financial years after its foundation, as long as the total value of those agreements does not exceed DKK 75 million. If you invest in a newly-established company and enter into agreements with that company, the total value of the investment and agreement must be less than DKK 75 million for the exception to apply. However, the exception does not apply if the newly-established company is a subsidiary of a foreign investor. Existing foreign companies can thus not use the exemption to establish a subsidiary in Denmark without having to apply for authorisation, regardless of whether the capital injection does not exceed DKK 75 million.

The exemption covers foreign direct investment in the form of capital injections, i.e. if the foreign investor subscribes for a share of the share capital or, by agreement, provides the newly-established company with equity. Long-term and irrevocable loans are also covered by the exemption. If a foreign investor simultaneously subscribes share capital, provides equity and provides a long-term loan to the newly formed company, this will also be covered by the exemption if the total amount of these transactions is below DKK 75 million.

If several foreign investors participate in the establishment of a new company, the de minimis limit applies to the total foreign investment. If two foreign investors, for example, both invest in the newly-established company, they can both do so without authorisation, if their respective investment as a whole does not exceed the de minimis limit. If one foreign investor invests DKK 75 million and another then invests another DKK 75 million the second investor must apply for authorisation to do so, provided that the Danish company is within the particularly sensitive sectors and activities. It is the foreign investor's responsibility to obtain information from the Danish company as to whether the volume of foreign investments exceeds DKK 75 million.

If the Danish company is required to keep accounts, the first financial year after the foundation can last up to 18 months. However, it is still calculated in relation to the exemption as one financial year, to which are added two sequential financial years of 12 months each. The exemption period can thus extend up to 42 months from the foundation. If the Danish company is not required to keep accounts, the three years are counted as the three calendar years after the year of establishment.

What happens if I establish a new company without authorisation?

If the Danish Business Authority becomes aware that a foreign investor has established a new company without authorisation under the Investment Screening Act, the Authority may demand information on whether the conditions for applying the exemption provision for investments and agreements when establishing new companies are met. If the Authority does not receive the required information, or receives information that does not document that the conditions are met, it may order that an application for authorisation for the investment or agreement must be submitted before a specified deadline, or that the investment or agreement is stopped.

Updated 10.08.2021

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