DENMARK Law and Practice Contributed by: Simon Milthers, Thomas Bøgedal Kristiansen, Mikkel Friis Rossa and Emil Steenberg, Bech-Bruun
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. The transaction agreement or a separate exclu- sivity/non-solicitation agreement may include provisions preventing the target company from soliciting competing offers, but it will typically not prevent the target company from entertain- ing or negotiating unsolicited (potential) compet- ing offers. The target board will normally also reserve the right to withdraw the offer recom- mendation in the event of a competing offer (with a higher price) – although the buyer may have matching rights to prevent a withdrawal or change of the board recommendation, provided that the buyer matches the competing offer with- in a limited/reasonable timeframe. 6.11 Additional Governance Rights If a buyer cannot obtain 100% ownership follow- ing a takeover offer, it is still possible to obtain governance rights with regard to the target company that effectively enable the bidder to exercise varying degrees of control over a target company. Among such rights are the following. • Board representation – members of a board of directors are elected with a simple majority of votes. • Voting rights – most decisions are passed by simple majority at the company’s gen- eral meetings. Generally, however, decisions involving an update of the company’s articles
of association (including changes to the share capital of the company) do require a quali- fied majority of two-thirds of the share capital represented and the votes cast at the general meeting. Furthermore, certain intrusive deci- sions 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. It is not possible to enter into domination and profit-sharing agreements in Denmark. Similar rights can be obtained through establishing share classes (regulated in the articles of asso- ciation). 6.12 Irrevocable Commitments It is common to obtain irrevocable commit- ments from key shareholders. They are typically provided as conditional, unilateral declarations stipulating that the shareholder will accept an offer, provided that the offer price is equivalent to (or higher than) an amount agreed between the shareholder and the buyer. Irrevocable undertak- ings may be “hard” (no revocation in the event of a competing offer, irrespective of the offer price of such offer) or “soft” (may be revoked in the event of a competing offer with a higher price that is not matched by the original offeror). The terms of the irrevocable undertakings are sub- ject to negotiations. Irrevocable undertakings may also include waiv- ers of certain protection rights otherwise afford- ed to shareholders under the Danish Takeover Order, including the equal treatment principle (meaning that a key shareholder may, on an informed basis, irrevocably commit to accept a lower offer price than the offer price offered to other shareholders of the target company).
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