DENMARK Law and Practice Contributed by: Dan Moalem, Jacob Bier, Thomas Enevoldsen and Poul Guo, Moalem Weitemeyer
cedures, commonly referred to as clean team arrange - ments, to ensure compliance. 2.5 Labour Law Regulations Non-Compete and Non-Solicitation Clauses In Denmark, non-compete clauses are primarily gov - erned by the Act on Employers’ and Salaried Employ - ees’ Use of Non-Competition and Non-Solicitation Clauses (the “Non-Competition Act”) of 2016. To be enforceable, a non-compete clause must be in writing, and the employee must receive compensation equiva - lent to at least 40% of their salary during the restrict - ed period. The maximum duration of a non-compete obligation is 12 months post-employment. Employers may terminate the clause with one month’s notice, thereby avoiding the compensation obligation. Non- solicitation of employees clauses can only be agreed in connection with a pending transaction and even in that case only for up to six months. Collective Bargaining and the Danish Model Denmark has one of the highest rates of collective bargaining coverage in the world, with approximately 80% of the workforce covered. Rather than relying heavily on statutory regulation, Denmark’s labour mar - ket is largely governed through agreements between employer associations and trade unions, a model known as the “Danish model”. These agreements reg - ulate wages, working hours, and general employment conditions. If the target is covered by such agree - ments, the buyer may become bound by their terms, influencing wage structures, working conditions and termination procedures. Thorough labour law due dili - gence is therefore essential in Danish transactions. TUPE For Transfer of Undertakings in asset transactions, the Danish rules implementing the EU Transfer of Undertakings Directive become relevant. Where the transferred assets constitute an economic entity that retains its identity after transfer (eg, through a carve- out), employees associated with that entity transfer automatically to the acquirer, who assumes all existing rights and obligations. 2.6 National Security Review In addition to the investment screening mentioned under 2.3 Restrictions on Foreign Investments , cer -
tain investments and transactions involving Danish defence-related companies are subject to a special regulatory ownership approval regime under the Dan - ish War Materiel Act ( Krigsmaterielloven ). The War Materiel Act applies to companies engaged in the manufacture of war materiel as defined under Dan - ish law, including components and parts designed for exclusively military use. The Danish Ministry of Justice is the competent authority for approvals. Where an ownership change falls within the War Mate - riel Act, this regime overrides the general rules in the Danish screening landscape. Ownership changes in companies covered by the War Materiel Act follow a distinct approval track administered by the Danish Ministry of Justice.
3. Recent Legal Developments 3.1 Significant Court Decisions or Legal
Developments Court Decisions
Court proceedings arising from M&A transactions are relatively infrequent in Denmark, partly because most private M&A agreements contain arbitration clauses, which means that disputes are resolved confidentially and do not generate publicly available case law. Key Court Decision In one significant ruling in 2023, the Danish Maritime and Commercial court examined whether the buyer had suffered a quantifiable loss where the company’s value, as assessed by an independent expert during the proceedings, exceeded the amount the buyer had claimed. The court also took into account that the buyer had already received a substantial payout under a W&I insurance policy. The case highlighted the importance of robust due diligence and the interplay between warranty claims and insurance recoveries. Legal Development The EU Listing Act, adopted in October 2024, intro - duced a number of changes to the Market Abuse Regulation, the Prospectus Regulation and related legislation, with the aim of making public capital markets more accessible, particularly for small and medium-sized enterprises. Key changes include the
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