DENMARK Law and Practice Contributed by: Simon Milthers, Thomas Bøgedal Kristiansen, Mikkel Friis Rossa and Emil Steenberg, Bech-Bruun
the industry has seen the development of cer- tain standards, particularly among experienced participants. Furthermore, there is a noticeable trend towards adopting international standards, particularly when international investors hold a significant amount of shares. 2.6 Change of Corporate Form or Migration Danish start-ups generally retain their original corporate form and jurisdiction as they progress in their development. Most start-ups are estab- lished as ApS, owing to the flexibility in corpo- rate governance and the relatively less stringent regulatory requirements. They typically remain under Danish jurisdiction and maintain this cor- porate structure until certain events necessitate a change. Such events might include initiating an IPO, engaging in a crowdfunding campaign, or other specific circumstances that require a tran- sition to a different corporate form or jurisdiction. Consequently, although start-ups usually stick to their initial corporate form and jurisdiction, they may alter these aspects when they reach sig- nificant milestones or make strategic decisions. 3. Initial Public Offering (IPO) as a Liquidity Event 3.1 IPO v Sale The Danish IPO market has been relatively dif- ficult and is not typically seen as a realistic exit route for immature companies. Investors are more likely to run a sales process when pursuing a liquidity/exit event rather than an IPO. Thus, most exit processes are primarily structured as a sale process from the outset. Although an IPO may also be pursued in a clas- sic exit scenario, IPOs and listings are gener- ally considered more viable options for compa-
nies, with expected future funding requirements being better served through access to the equity capital markets rather than by private equity or debt capital. However, even for better-suited IPO candidates, it is customary to arrange for a dual-track process at the outset where a sale to a long-term investor is sought in parallel with an IPO. Accordingly, save for certain IPO candidates owing to their ownership structure (eg, founda- tion ownership requiring the foundation to main- tain a degree of influence), the general trend for IPO candidates – albeit not in all liquidity/exit events involving any type of company – is to have a dual-track process. 3.2 Choice of Listing IPOs and listings of Danish companies are most likely to be made in Denmark, with listing on the regulated market of Nasdaq Copenhagen as the sole initial exchange. The familiarity of the regu- latory regime and only having to deal with one set of stock exchange rules is generally prefer- able for an initial listing to reduce complexity and administrative burdens. The Danish equity capi- tal market has generally been sufficient to meet company demands for capital both in IPOs and secondary issuances, as well as in high-volume transactions. Historically, some Danish companies have pur- sued their initial listing on the Swedish Nasdaq Stockholm exchange. Growth companies, in particular, have pursued listing on the First North Stockholm multilateral trading facility (non-regu- lated market) maintained by Nasdaq Stockholm, which is generally perceived as being more liq- uid than the corresponding First North Copen- hagen exchange. However, this trend has been reversed somewhat in recent years, with some Danish companies originally listed on another
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