DENMARK Law and Practice Contributed by: Simon Milthers, Thomas Bøgedal Kristiansen, Mikkel Friis Rossa and Emil Steenberg, Bech-Bruun
• exception 1 – if the transferring company has multiple shareholders, and one or several of these shareholders have been participants for less than three years without having held the majority of the votes, and these shareholders collectively hold the majority of the votes in the receiving company after the transaction; • exception 2 – where a demerger is carried out as a partial demerger, and a shareholder who carries on business of buying and selling shares in the transferring company is entitled to receive tax-free dividends on the shares in the transferring compa- ny and is remunerated with something other than shares in the receiving company; • exception 3 – if a shareholder with controlling inter- est in the receiving company is not based in the EU or in a country that has a double-tax treaty with Denmark; and • exception 4 – if a corporate shareholder who, at the time of the demerger, owns at least 10% of the shares or owns group shares in the transferring company receives cash as part of the spin-off (this rule applies only if the shareholder is eligible for tax-exempt dividends from these shares). The specific requirements for a tax-exempt demerger with permission are as follows. • The spin-off should be motivated by valid business objectives rather than tax evasion. The DTA con- ducts a detailed assessment of each transaction to verify its legitimacy. • The shareholders must be remunerated in the receiving company in the same proportions as they were in the transferring company. 5.3 Spin-Off Followed by a Business Combination A spin-off immediately followed by a business com- bination is technically possible in Denmark. However, it is not very common. 5.4 Timing and Tax Authority Ruling The timing for a spin-off in Denmark depends on whether it is executed as a tax-exempt demerger with or without permission from the DTA. The time need- ed to obtain a ruling from the DTA varies based on the transaction’s complexity and specifics. The DTA
assesses each case individually, leading to different processing times. Without DTA Permission If the spin-off meets certain conditions (eg, a three- year holding requirement and balance adjustment rule), it can proceed without DTA permission. This process is generally quicker, influenced by legal regis- trations, audit valuations and other preparatory steps. With DTA Permission If the spin-off does not meet the conditions for a tax- exempt demerger or involves complexities, a ruling from the DTA is required. This includes cases where tax evasion might be a concern or shareholders are remunerated in cash. 6. Acquisitions of Public (Exchange- Listed) Technology Companies 6.1 Stakebuilding Stakebuilding In a mandatory offer, stakebuilding is a prerequisite, given that mandatory offers are triggered by the buyer having acquired a controlling stake. In voluntary offers, pre-offer stakebuilding is somewhat deal-specific and neither common nor uncommon. Reporting Threshold A buyer must notify the listed company and the Dan- ish Financial Supervisory Authority (FSA) if the buyer’s direct or indirect stake in the listed company cross- es any of the following thresholds: 5%, 10%, 20%, 25%, ⅓, 50%, ⅔ or 90% of the voting rights or share capital of the company. Notification must generally be made no later than four business days after the buyer becomes aware that it has crossed a threshold. A buyer is normally presumed to have become aware of crossing a threshold no later than two business days after completion of the transaction. The com- pany must announce the information provided to it in
a major shareholder notification. Purpose of Acquisition and Plans
A buyer is not required to disclose its intentions or the purpose of the stakebuilding in its notification of major shareholdings.
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