DENMARK Law and Practice Contributed by: Jakob Østervang, Peter Østergaard Nielsen, Anders Hørlyck Jensen and Tejs Degn Leth Ernst, Accura Advokatpartnerselskab
the redemption amount corresponding to the non- transferred shares for the benefit of the respective minority shareholders. This is typically done through the central securities depository, as the shares are usually registered there. The consideration for the redemption may be in the same form as specified in the offeror’s tender offer, or be paid in cash. Minority shareholders can always demand cash payment. 4.9 Requirement to Have Certain Funds/ Financing to Launch a Takeover Offer In Denmark, the offeror must ensure that it can fully meet any requirement regarding consideration offered to the shareholders in the form of cash, and ensure that any other form of consideration can be provided. The Danish FSA accepts that the offeror’s financing agreements may contain usual customary conditions. However, it is the offeror’s responsibility to ensure that the terms of a financing agreement do not prevent the fulfilment of the offer. Financing Banks or Buyer Making the Offer In most cases, the buyer itself makes the offer, and it is common for the buyer to secure a certain level of financing commitments from banks or to secure financing in another way before making the offer to ensure that the necessary funds are available. Conditional Offers A takeover offer or business combination in Denmark cannot be conditional on the bidder obtaining financ- ing. This ensures that the offer is credible, and that the offeror has the financial capability to complete the transaction. 4.10 Types of Deal Protection Measures The most typical deal protection measure relates to the board of directors publicly recommending the offer to shareholders. In the Danish Recommendations on Corporate Gov- ernance, it is suggested that the board of directors abstain from countering any tender offers by taking actions that seek to prevent shareholders from decid- ing on the tender offer without prior approval from
the general meeting. The target must adhere to these recommendations on a comply-or-explain basis. Moreover, private transaction documentation increas- es deal certainty, typically in the form of a transaction agreement between the offeror and the target compa- ny, and irrevocable undertakings between the offeror and major shareholder(s). Non-solicitation provisions, matching rights, and exclusivity clauses in transac- tion agreements are fairly common. Voting undertak- ings are also seen as part of irrevocable undertakings, whereas break-up fees are less common. It is also uncommon to enter into “hard” irrevocable undertak- ings in Denmark. Hence, irrevocable undertakings usually allow the relevant shareholders to accept a competing offer under certain conditions, as relevant. 4.11 Additional Governance Rights If an offeror cannot obtain 100% ownership of a tar- get company in Denmark, it can still obtain significant governance rights, depending on the level of owner- ship achieved in connection with the offer. Key governance rights based on ownership levels include the following. • Simple majority (at least 50%) – The right to pass ordinary resolutions at general meetings, includ- ing, among other things, the appointment of board members, thereby gaining influence over the com- pany’s strategic direction. • Qualified majority (two-thirds) – The right to pass special resolutions, which are required for signifi- cant corporate actions such as amending the arti- cles of association, approving mergers, and capital increases or decreases. This level of control allows the bidder to implement more substantial changes to the company’s operations and strategy. • Supermajority (90%) – If the offeror reaches 90% ownership, it can initiate a squeeze-out process to acquire the remaining shares from minority share- holders. Moreover, this ownership level allows for the adoption of resolutions that reduce existing shareholders’ rights to receive dividends in favour of other shareholders, restrict the marketability of shares, and limit the ability to exercise voting rights attached to shares.
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