DENMARK Law and Practice Contributed by: Henrik Sjørslev, Peter H. Knudsen, Henrik Lund-Koefoed and Levent Kitir, DLA Piper Denmark
7. Duties and Liability of Directors and Officers 7.1 Duties of Directors The management is responsible for ensuring that a company has sufficient working capital to continue trading. A poorly capitalised company can continue trading (without management risking liability) provided the management has a reasonable expectation that the financial situation can be rectified within a foresee - able timeframe. A company is deemed insolvent when it can no longer fulfil its obligations as these become due, and this is not merely temporarily. The test for insolvency is thus a liquidity test. Once a company reaches the point of no return/point of hopelessness, the management (both the board of directors and the executive management) has an obligation to: • cease the operations of the company; • ensure the equal treatment of creditors; and • not take on further liability towards any creditor. With the new rules on preventative restructuring, the management can now also take in-court steps before insolvency occurs, if it is likely that insolvency will occur. 7.2 Personal Liability of Directors The personal liability of directors is primarily regulated in the Danish Companies Act as well as common Dan - ish law of torts. Consequently, founders and mem - bers of the management, who under the performance of their assignment deliberately or negligently have caused loss for the company, are personally liable to cover the company’s losses. This personal liability can also be applied to shareholders, provided that the caused loss is a consequence of deliberate or gross negligent behaviour. The regulations on management liability apply to both directors and other members of the management – eg, officers and members of the board.
will apply regarding certain foreign insolvency-related matters – eg, perfection of security, claw-back – based on the principle of lex concursus. 6.4 Recognition and Enforceability Recognition of Restructuring or Insolvency Procedures Given that, in general, Danish law does not recog - nise foreign jurisdiction in insolvency-related matters, Danish private international law stipulates the laws by which a contract is governed. Recognition and Enforcement of Foreign Judgments Denmark is, due to its reservation from judicial co- operation in the EU, not part of or bound by EU regu - lation within the judicial area. However, Denmark has chosen to opt into (and implement into Danish law) Brussels I/EU Regulation No 1215/20212 on jurisdic - tions and the recognition and enforcement of judg - ments in civil and commercial matters. Furthermore, Denmark has adopted the Lugano Convention (on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters) and the Hague Convention (of 30 June 2005 on choice of court agreements). Judgments from courts in countries that are not par - ties to these international conventions and treaties are not recognised, and cannot be enforced, in Den - mark. The foreign party in question will need to obtain a court order/judgment from a Danish court. 6.5 Co-Ordination in Cross-Border Cases Even though it has happened on a case-by-case basis, the Danish courts – as a general rule – do not liaise with foreign courts. 6.6 Foreign Creditors In Denmark, foreign creditors are dealt with in the same manner as Danish creditors.
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