DENMARK Law and Practice Contributed by: Dan Moalem, Jacob Bier, Thomas Enevoldsen and Poul Guo, Moalem Weitemeyer
Threshold of above 50% • Effective control is obtained since election to the board of directors and most other decisions on general meetings are decided with simple majority. This includes decisions as to whether to declare dividends. There is in Danish legal theory a discus - sion regarding a majority shareholder’s ability to “starve out” a minority by not declaring dividends. However, this would require very specific circum - stances and would need to take into account the context of the target company. There is conse - quently no right for a minority to demand a certain level of dividend payments. Threshold of two-thirds • Changes to articles, including capital increases, can be resolved. The principles of equal treatment and economic protection of the minority, which are the fundamental principles in Danish company law, always apply. • Generally speaking, the bidder would be able to adopt a capital increase at market value (directed at said bidder), thereby diluting the minority from an ownership (but not economic) perspective. Further, a capital increase below market value with pre-emption rights for all could be adopted. In a non-listed company, this would likely have the effect that minority shareholders would be diluted both from an ownership and economic perspective as not all of them would have the funds available to participate. However, as a starting point, a capital increase such as this would still be valid, as all shareholders are invited to participate and thereby treated equally. • If the capital increases described above are car - ried out in circumstances where it is evident that a majority shareholder is seeking to obtain an advan - tage – eg, achieving a shareholding in excess of 90% in a situation where the majority shareholder could not reach this by agreement – it may be chal - lenged in courts by the minority as an abuse of the majority shareholder. Threshold of above 75% • The majority shareholder can block a scrutiny of the company. However, minority shareholders can still initiate legal proceedings claiming that
holding two-thirds of the shares and voting rights enables a shareholder to pass most amendments to the articles of association, including adopting capital increases or approving mergers. 6.6 Requirement to Obtain Financing Financing conditions are not favoured in private M&A. In competitive or structured auction processes, sell - ers will typically not accept offers that are conditional upon financing. Bidders are expected to have com - mitted financing in place at signing. In the context of public takeovers, neither a manda - tory nor a voluntary offer can be conditioned on the bidder securing financing. 6.7 Types of Deal Security Measures Deal Protection Mechanisms Break fees are permissible provided they are propor - tionate and justifiable in light of the board’s fiduciary duties. Fees that are considered excessive or that effectively deter competing bids may be viewed as inconsistent with the directors’ obligation to act in the company’s interest. Non-solicitation provisions are common in recommended transactions, typically restricting the target from actively soliciting alternative offers, while preserving the board’s ability to respond to unsolicited superior proposals. Matching rights are also frequently included, allowing the original bidder to improve its offer if a competing bid arises. Interim Periods Regulatory developments, particularly expanded foreign direct investment screening and continued merger control scrutiny, have in practice generally extended interim periods between signing and clos - ing, making regulatory clearance a more significant timing consideration in transaction planning. 6.8 Additional Governance Rights Overview Majority Thresholds and Attached Governance Rights Without being exhaustive, thresholds of above 50%, two-thirds, above 75% and above 90% of shares and votes are of relevance from a majority perspective under the Danish Companies Act.
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