DENMARK Law and Practice Contributed by: Simon Milthers, Thomas Bøgedal Kristiansen, Mikkel Friis Rossa and Emil Steenberg, Bech-Bruun
• Directors must act in good faith in what they con- sider to be the best interests of the company and its shareholders. • Directors must act in accordance with the compa- ny’s constitution and only exercise their powers for the purposes for which they were conferred. 11.2 Special or Ad Hoc Committees It is uncommon for boards of directors to establish special or ad hoc committees specifically for business combinations. However, in certain situations – such as mergers between one or more listed companies – it may be common to establish a special committee. These committees are typically formed to: • negotiate the deal; • plan for integration; • assess separation issues and synergies; and • handle conflicts of interest. 11.3 Board’s Role In takeover offers, the board’s primary role is to ensure that the shareholders are presented with the best possible offer. A board cannot prevent or impede a potential offer – although the board may (and com- monly does) engage in negotiations with a bidder for the purpose of evaluating an offer and ensuring that the potential transaction when presented to the shareholder is aligned with the best interests of the company and its shareholders.
In takeover offers, the board of the target company is required to publish a statement on the offer, which may be neutral or in the form of a recommendation to shareholders to accept the offer or to reject the offer. In a friendly process, it is customary to obtain a positive recommendation from the target company’s board. A target company’s board commonly obtains a fairness opinion from an independent financial adviser to support the board’s statement/recommendation of the offer. Shareholder litigation challenging an M&A board decision is less common in Denmark. However, it can occur if shareholders claim that the board acted against their interests or overlooked alternatives (ie, the board did not perform its duty to ensure that the best possible transaction was made or, in the case of a takeover offer, was presented to the shareholders). 11.4 Independent Outside Advice External legal counsel is typically required both for private and public M&A transactions, with financial advisers and accountants also playing key roles. In takeover offers or statutory mergers/business combi- nations involving publicly listed companies, it is cus- tomary for the target company’s board to hire inde- pendent financial advisers to provide fairness opinions and assist with valuation matters.
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