DENMARK Law and Practice Contributed by: Dan Moalem, Jacob Bier, Thomas Enevoldsen and Poul Guo, Moalem Weitemeyer
controlled by industrial foundations, which are typi - cally structured to retain long-term control and are not inclined to sell their controlling stakes. 9.2 Directors’ Use of Defensive Measures The board of a Danish target company may adopt defensive measures permitted under Danish company law. In adopting defensive measures, directors must com - ply with their statutory duties and may be held liable if the measures are intended to secure their own posi - tions instead of protecting the interests of the com - pany and its shareholders. 9.3 Common Defensive Measures Available Defensive Measures Defence measure may include: • refusing to make due diligence documentation available; • recommending that shareholders reject an offer; • seeking a competing bid; or • pursuing alternative transactions. Structural measures such as capital increases require proper authorisation from the general meeting and must comply with the equal treatment principle. Precautionary Structural Measures As a precautionary matter, companies may include standing authorisations in their articles of associa - tion enabling the board to carry out directed share issuances. In larger companies with historical family ownership, dual-class share structures are common to ensure superior voting rights. 9.4 Directors’ Duties Fiduciary Duties The Danish Companies Act mandates the board of directors and the management of a limited liability company to act in accordance with the principles of duty of care and duty of loyalty and to have due regard for the “corporate benefit”. Directors must act in the best interests of the company as an independent legal entity. The concept of the “company’s interest” is not defined narrowly as short-term profit maximisation; rather, it is generally understood to encompass the
company’s long-term value creation, financial sustain - ability, and continued viability. Board’s Role in Public-to-Private Transactions In the context of a public-to-private, the target compa - ny’s board plays an important advisory role. Although the bidder is not legally required to seek board approval, it is customary for the board to issue a rea - soned opinion on the offer, including an assessment of the offer price and strategic rationale. The board is expected to act independently and in the interest of all shareholders, and it may engage external financial and legal advisers to support its assessment. 9.5 Directors’ Ability to “Just Say No” Subject to directors acting in the company’s best interests and carrying out their fiduciary duties, they may take action that seeks to prevent a business com - bination – see 9.3 Common Defensive Measures . Ultimately, it is the shareholders who accept (or reject) an offer. Litigation in connection with M&A transactions can arise, but is generally limited to specific post-closing disputes rather than challenges to the validity of the transaction itself. Most disputes arise from alleged breaches of representations and warranties in the share purchase agreement, commonly relating to financial reporting, tax exposures, compliance issues, or undisclosed liabilities. With the advent of W&I insur - ance, claims occur more often but are also more easily resolved. Earn-Out Disputes Earn-out arrangements are another frequent source of conflict. Where part of the purchase price depends on future performance, disagreements often concern accounting principles, performance calculations, or whether the buyer has operated the business in accordance with agreed assumptions. 10. Litigation 10.1 Frequency of Litigation Post-Closing Disputes
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