DENMARK Law and Practice Contributed by: Flemming Elbæk, Helle Ina Elmer, Mads Lund and August Reinhold, HaugaardBraad
17. Transactions 17.1 Environmental Due Diligence
17.3 Key Issues in Environmental Due Diligence In Denmark, the environmental issues that surface in legal due diligence depend on the target’s business, assets and the transaction’s objectives, but the review consistently tests regulatory permissions, compliance and legacy risk. Counsel will verify that all required permits exist, remain valid and are complied with, identify any pending orders or investigations, and assess whether the transaction could trigger new approvals or liability exposure. Typical focus areas and examples include: • contamination risk – actual or potential soil/ groundwater pollution, historic spills, V1/V2 map- ping status and any cleanup obligations; • permits and compliance – scope/transferability of environmental permits (eg, discharge, waste, IED), monitoring data, breaches, notices or enforcement actions; • emissions and discharges – wastewater quality and limits, air/noise/stormwater management, hazard- ous-substance storage and secondary contain- ment; • protected areas and constraints – Natura 2000/ protected sites, protected species, listed buildings, etc; and • land and access – title, access roads, zoning and any shift to more sensitive land use (such as hous- ing or childcare) on mapped sites.
Environmental due diligence is a well-established part of M&A, financing and property transactions in Denmark. The need and scope of such due diligence depend on the nature and environmental risk profile of the target and are therefore determined on a case- by-case basis. It is most common where a transaction involves activities with potential environmental impact – such as industrial operations, power plants, waste facilities or older industrial sites – and in real estate transactions to assess possible soil or groundwater contamination, historic use, etc. Typically, due diligence includes both legal and tech- nical reviews, covering environmental permits and compliance status, inspection reports, mapping of contaminated land (V1/V2), historic land use and any outstanding orders or liabilities. 17.2 Disclosure of Environmental Information Under Danish law, the caveat emptor principle applies, which means that the buyer purchases at their own risk in the absence of a warranty in the contract. A buyer of a company or property has an elaborated duty to investigate the company’s conditions, includ- ing the environmental conditions. Conversely, the seller is obligated not to withhold or misrepresent material facts about the company/prop- erty being sold or any other information that may be of significant importance to the buyer. If violated, the seller may be held liable.
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