DENMARK Law and Practice Contributed by: Simon Milthers, Thomas Bøgedal Kristiansen, Mikkel Friis Rossa and Emil Steenberg, Bech-Bruun
6.9 Requirement to Have Certain Funds/ Financing to Launch a Takeover Offer Certain funds are required when a takeover offer is launched (ie, at the time the intention to launch a take- over offer is announced or, in the case of mandatory offers, at the time it is announced that the buyer is obligated to make a mandatory offer). If a takeover offer is debt-financed, the debt financing must be committed prior to launch, which generally means having a signed and committed loan facility agreement in place. The FSA accepts that the financ- ing may still be conditional on customary conditions precedent; however, it is the buyer’s responsibility that any conditions for the financing will not hinder the completion of the takeover offer. The FSA may demand evidence of committed financing. The offer document must include a description of how the takeover is financed. Funds must be available for settlement of the takeover offer, which typically takes place four or five days after expiry of the offer period. Financing institutions are not deemed to be making an offer or be acting in concert with the buyer solely by reason of their financing to the buyer. In the event of share exchange offers, the buyer must have taken all reasonable measures to ensure its abil - ity to deliver the shares before launching the offer. The FSA interprets this as meaning that the buyer must have obtained the necessary corporate authorisa- tions to issue the consideration shares prior to launch. However, whether all reasonable measures have been taken is a specific assessment made on a case-by- case basis. 6.10 Types of Deal Protection Measures It is unusual for target companies to grant break fees or make other arrangements that effectively deter any potential competing offers and prevent the target board from pursuing other offers that may generate higher shareholder value (given that such arrangement may be conflicting with statutory duties of the target board). The transaction agreement or a separate exclusivity/ non-solicitation agreement may include provisions
preventing the target company from soliciting com- peting offers but will typically not prevent the target company from entertaining or negotiating unsolic- ited (potential) competing offers. The target board will normally also reserve the right to withdraw the offer recommendation in the event of a competing (more attractive) offer, although the buyer may hold matching rights to prevent a withdrawal or change of the board recommendation, provided that the buyer matches the competing offer within a limited/reason- able timeframe. 6.11 Additional Governance Rights If a buyer cannot obtain 100% ownership following a takeover offer, it is still possible to obtain governance rights with regard to the target company that effec- tively enable the bidder to exercise varying degrees of control over a target company, including (without limitation) the following. • Board representation – members of a board of directors are elected by a simple majority of votes. • Voting rights – most decisions are passed by sim- ple majority at the company’s general meetings. Generally, however, decisions involving an update of the company’s articles of association (includ- ing changes to the share capital of the company) require a qualified majority of two thirds of the share capital represented and the votes cast at the general meeting. Furthermore, certain intrusive decisions require a qualified majority of 90% of the share capital represented and the votes cast at the general meeting or even unanimity between all shareholders. If delisting cannot be achieved based on +90% ownership (enabling a buyer to squeeze-out remaining shareholders), a listed com- pany may apply for delisting from Nasdaq Copen- hagen on the basis of a resolution by the general meeting adopted by at least 90% of the votes cast as well as 90% of the share capital represented at the general meeting. Subject to certain conditions, Nasdaq Copenhagen will accommodate such an application. It is not possible to enter into domination and profit- sharing agreements in Denmark. Similar rights can be obtained through establishing share classes (regulat- ed in the articles of association).
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