Special financial agreements
The Danish Business Authority screens "special financial agreements" in line with foreign investments. These are joint venture agreements, and certain commercial agreements.
Joint venture, supplier-, operating or service agreement
A special financial agreement exists if the following two conditions are met:
The agreement must deal with one of the following three agreement groups
A joint venture on research and development,
A supplier agreement (an agreement to supply raw materials, products, plant or semi-finished products and components, including software)
An operating or service agreement i.e. an agreement on the operation or maintenance of buildings, facilities, installations or systems.
If an investor achieves control of or significant influence through the agreement of a Danish company or entity (e.g. a public authority) or business-critical areas of the company or entity (e.g. development activities).
The Investment Screening Act does not cover agreements implemented before 1 September 2021, i.e. a binding agreement entered into between the parties before that date. It will therefore be insufficient that there is a declaration that the parties have agreed to declare that they are prepared to enter into an agreement (letter of intent), a final draft of an agreement or a conditional agreement. If an agreement entered into before 1 September 2021 is later amended or extended, the Danish Business Authority will regard it in principle as a new agreement that may require authorisation. In such circumstances, the Danish Business Authority will look at whether there are significant changes or a long-term extension. Foreign investors that have to enter into a special financial agreement with a Danish company or entity must be aware that such an agreement may be covered by the requirements of the Investment Screening Act. Be aware that a foreign investor can also be a company domiciled in Denmark owned by persons or companies from other countries. See which foreign investors and Danish entities are covered by the requirement for authorisation or notification of a special financial agreement below under "Authorisation or notification of a special financial agreement". In principle, the general rules in the Act and the Executive Order on Applications on who is covered as a foreign investor and who is covered as an investment object also apply to special financial agreements. However, a special rule applies in accordance with the Executive Order on Applications to research institutions in relation to agreements on joint ventures concerning research and development. Agreements between a foreign investor and public and private non-profit research institutions are thus covered by the Act and require authorisation in the case of research and development joint ventures relating to the defence sector, IT security, critical technology or critical infrastructure. Foreign investors/parties to the agreement are obliged to determine whether a specific agreement will be covered by the Act. However, a Danish authority covered by the Act according to the Executive Order on Applications, may also have an administrative duty to investigate before entering into such an agreement with a foreign investor.
Learn more about joint ventures, supplier agreements, and operating or service agreements.
Authorisation or notification requirement
A special financial agreement can be covered by the rules on authorisation or notification. Learn more about the difference between authorisation and notification. The foreign investor/party to the agreement is always the party that can apply or notify. If the
agreement you intend to enter into is covered by mandatory authorisation, it is important to be aware that it is the foreign investor/party to the agreement (i.e. not the Danish company or entity) who is obliged to apply for authorisation from the Danish Business Authority. Failure to apply for authorisation for an agreement subject to the authorisation requirement can have serious consequences.
Foreign investors/contracting parties covered by the authorisation requirement
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
Foreign investors/parties to the agreement subject to notification
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
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 the agreement you intend to or have entered into is not covered by mandatory authorisation, you can submit notification to the Danish Business Authority if the agreement may pose a threat to national security or public order.
If an investor enters into a special financial agreement with a Danish company or entity within sectors deemed to be particularly sensitive in relation to national security or public order (defence, dual-use, IT security, critical infrastructure and critical technology) must apply for authorisation before entering into the agreement.
If an investor enters into a special financial agreement with a Danish company or entity in all sectors other than the particularly sensitive ones, you can use the notification scheme if the agreement may pose a threat to national security or public order. You can notify planned agreements and agreements already entered into. Be aware that if you choose not to notify the agreement and thus get it approved by the Danish Business Authority, the authority may initiate further investigation of the agreement and possibly issue an order to terminate the agreement for up to five years from it being concluded.
The Investment Screening Act does not apply to a special financial agreement in the following situations
For more detailed information on the following, see the assessment model under agreements covered by the Investment Screening Act:
If the proposed agreement is to be concluded with a company domiciled in an EU or EFTA country, and persons or companies from a third country do not control or have a significant influence on the company – see step 1 in the assessment model
If the agreement only concerns a single supply, supply of plant (except in the case of supplier agreements) or a standalone operation or service – see step 5 in the assessment model
If the agreement has been entered into on the basis of a standard agreement approved by the Danish Business Authority, see more about standard agreements in step 3 of the assessment model here
In the case of an agreement between group companies – see step 3 in the assessment model
In the case of an agreement with a newly-established company that is below the de minimis limit – see step 3 in the assessment model
If a joint venture other than research and development – see step 2 in the assessment model
Agreements are defined in more detail in section 4, no. 5 of the Investment Screening Act.
Requirements for authorisation for agreements are stipulated in section 7 of the Act.
Options for notification of agreements are stipulated in section 11 of the Act.
Refer to sections 12-17 of the Executive Order on Applications for more detailed rules on individual agreement types.
Guide to agreements covered by the Act
When you need to assess whether a special financial agreement that you intend to enter into is covered by the Investment Screening Act, and whether it requires authorisation or you can settle for a notification and the agreement is not covered by the excemptions above, it is recommended that you divide the assessment into a few simple steps. This will ensure that you do not overlook conditions that may be important for you to comply with all requirements of the Investment Screening Act.
What happens if I do not apply for authorisation for, or notify an agreement?
If you do not apply for authorisation for a special financial agreement that requires authorisation, the agreement will be illegal. Pursuant to the Investment Screening Act, the Danish Business Authority may carry out further investigation if an agreement has been made without authorisation in violation of the Act. If it turns out that an agreement has been entered into in violation of the Act without authorisation, the Authority can either order the violation to be brought to an end, i.e. authorisation must be applied for within a specified period, or order the agreement to be cancelled by a given date. If an order to terminate the agreement is not complied with within the specified deadline, it will be invalid. If you are not obliged to apply for authorisation, but the intended agreement is covered by the Act's notification scheme, you will not be obliged to notify the agreement and obtain authorisation. If you opt for not providing notification of such an agreement, the Danish Business Authority can launch a detailed investigation to determine if it could pose a threat to national security or public order for up to 5 years from completion of the agreement. If, after such an investigation, the Authority concludes that the agreement is in violation of the Act. it may issue an order to terminate the agreement within a specified period, and failure to comply with this order will also render the agreement invalid. The Danish Business Authority may also publish that it has initiated an investigation into whether a special financial agreement has been made in violation of the Act, and may also publish the result. Furthermore, if a foreign investor fails to comply with an order to terminate an agreement entered into in violation of the Act, the Danish Business Authority may also inform the EU Commission and other EU member states in accordance with the EU co-operation mechanism on screening foreign direct investment.
How do I find out if an intended agreement is covered by the Investment Screening Act?
The Danish Business Authority provides guidance on the general understanding of the Investment Screening Act and the detailed rules laid down by Executive Orders. If you need further advice on whether an intended special financial agreement will be covered by the Acts or Executive Orders and the consequences thereof, the Danish Business Authority may recommend that you seek external consultation.
Earlier screening relating to public energy projects
On 1 July 2024, the Danish Investment Screening Act was amended (introduction of section 14 e), allowing for earlier screening of special financial agreements relating to offshore wind tenders and other major public energy projects.
The possibility of earlier screening pursuant to section 14 e does not change the rules of the Danish Investment Screening Act regarding special financial agreements in general, including which tenderers are covered. This means that tenderers domiciled or controlled outside the EU/EFTA are covered. The agreement itself must also be covered by the Danish Investment Screening Act.
From 1 July 2024, it is possible for tenderers to apply for authorization to enter into a special financial agreement when you have been prequalified in certain cases. The possibility for earlier screening requires that the following two conditions are met:
The contracting authority is the Ministry of Climate, Energy and Utilities, subordinate authorities (e.g., the Danish Energy Agency) or independent public enterprises owned by the Ministry of Climate, Energy and Utilities (e.g., Energinet).
Participation in the tender is subject to the Regulation of the European Parliament and of the Council on foreign subsidies distorting the internal market (FSR Regulation).
When submitting an application to enter into a special financial agreement, the Danish Business Authority recommends that you include documentation that you have been prequalified or have submitted a tender in a public procurement procedure covered by the FSR regulation, where the Ministry of Climate, Energy and Utilities, subordinate authorities or independent public undertakings owned by the Ministry, is the contracting authority.
The application form regarding the new provision (section 14 e) is the same as when applying for authorization to enter into any other special financial agreements.
You can find the application form here
The new provision (section 14 e) does not concern the energy island in the North Sea, which, instead, is regulated in chapter 2a of the Danish Investment Screening Act.