DENMARK Law and Practice Contributed by: Thomas Maaberg Hansen and Peter Sand, Gorrissen Federspiel
Instead, the investment must be assessed and, where required, approved under the Danish War Material Act. This exception only applies to investments. The Dan - ish FDI Act’s rules on special economic agreements therefore continue to apply to companies covered by the Danish War Material Act. In practice, this means that if the Danish target holds a licence under the Dan - ish War Material Act, any required prior approval of the investment must be obtained under that the Danish War Material Act rather than under the Danish FDI Act. Competent Authority The Danish Business Authority is the competent authority responsible for administering and enforcing the Danish FDI Act. Where the Danish War Material Act applies, the regu - lation is enforced by the Danish Minister of Justice. Scope Pursuant to the Danish FDI Act, prior authorisation is required before completing foreign investments in and special economic agreements with Danish companies within certain critical sectors and activities if certain thresholds are exceeded. The Danish FDI Act distinguishes between invest - ments in particularly sensitive sectors and activities, which are subject to mandatory prior screening, and other investments that may be reviewed under the voluntary notification regime where they are capable of affecting national security or public order. The following are deemed as “particularly sensitive sectors and activities” and are covered by the require - ment for prior authorisation set out in Section 5 of the Danish FDI Act: • companies within IT security functions or process - ing of classified information; • companies within the defence sector; • companies that produce dual-use items; • companies within “other critical technology”; and • companies within “critical infrastructure”. Companies within the defence sector are defined as follows:
• companies developing or producing weapons, ammunition or other technology for military use on the EU Common Military List; and • companies that provide services to the Danish defence sector that are of particular importance to the operations of the Danish defence sector. The Danish War Material Act applies to companies that produce war material, including equipment designed exclusively for military use, firearms and firearm-like objects not specifically made for hunting or sport, military-use ammunition, power and explosives, and components or parts designed for such material with no civilian application. 6.2 Transactions Subject to FDI Screening FDI The mandatory and voluntary screening regimes under the Danish FDI Act cover: • foreign direct investments in Danish companies; and • special economic agreements made by foreign entities with Danish companies. The Danish War Material Act The screening regime under the Danish War Material Act covers foreign investments but not special eco - nomic agreements, which would instead be subject to the Danish FDI rules. Approval is required from the Danish Minister of Jus - tice in the event of a foreign investment in a company that produces war material under certain circumstanc - es. 6.3 Mandatory vs Voluntary Notification FDI Mandatory pre-approval Foreign investments and special economic agree - ments involving Danish companies operating in a particularly sensitive sector or activity, including the defence sector, are subject to mandatory screening and approval where the applicable thresholds are met. The consequences of failing to obtain mandatory prior approval may include an order from the Danish Busi - ness Authority to submit a filing or, where appropriate,
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