DENMARK Law and Practice Contributed by: Dan Moalem, Jacob Bier, Thomas Enevoldsen and Poul Guo, Moalem Weitemeyer
usually remain confidential unless specific circum - stances require broader transparency.
In public takeovers, the board of directors rarely establish ad hoc committees. 8.3 Business Judgement Rule The business judgment rule is not codified in any Dan - ish legislation; however, the concept of the business judgement rule is generally accepted as a governance principle in Denmark and strongly supported by case law. The management of a company generally has broad authority to handle and make decisions regarding the company’s operations and strategy. However, this authority is subject to company law and fiduci - ary duties, meaning the management must act in the best interests of the company and its shareholders and comply with applicable laws and governing docu - ments. A wide margin of error in discretionary busi - ness decisions is acknowledged. 8.4 Independent Outside Advice Both private and public M&A will almost always involve legal and financial advisors. In public M&A, the board of directors of the target will typically obtain fairness opinions on valuation. 8.5 Conflicts of Interest Conflict-of interest-questions in management come up from time to time in case law, with the applicable principles firmly laid out in the Danish Companies Act. Pursuant to Section 131 of the Danish Companies Act, an executive or management member is disqualified from, for example, dealing with matters concerning agreements between the company and third parties if that member has a material interest in an agreement that goes against the company’s interests.
8. Duties of Directors 8.1 Principal Directors’ Duties Corporate Benefit
The concept of the “corporate benefit” is a central principle of corporate governance and directors’ duties. Under Danish company law, members of the board of directors and executive management must act in the best interest of the company. This duty is owed to the company as a separate legal entity, not directly to individual shareholders or specific stake - holder groups. Scope of the Duty This benefit is not formally defined in statutory law, but has been subject to scrutiny in various cases. It is generally understood as the long-term, sustainable interest of the company as an independent enterprise. In practice, this will often align with the collective inter - ests of shareholders, particularly in value-creating transactions. Directors must balance considerations such as finan - cial performance, risk profile, creditor protection, employees, and long-term strategy. In situations involving controlling shareholders or conflicts of inter - est, the board must ensure that decisions reflect the company’s overall interest rather than the preferences of dominant owners. 8.2 Special or Ad Hoc Committees The Danish Recommendations on Corporate Govern - ance address the use of board committees. The Recommendations encourage listed companies to establish key standing committees, most notably an audit committee and, where relevant, nomination and remuneration committees. More generally, they recognise that the board may establish ad hoc com - mittees when appropriate to ensure thorough and independent consideration of specific matters. Board committees are typically only prevalent among larger organisations.
9. Defensive Measures 9.1 Hostile Tender Offers
Hostile takeover bids are legally permitted in Denmark, but they are rare in practice. Instead, bidders prefer to engage in direct negotiations with the board to ensure their support for the bid. One of the reasons for this is the ownership structure of Danish listed companies. A significant number of Danish listed companies are
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