DENMARK Trends and Developments Contributed by: Simon Milthers, Thomas Bøgedal Kristiansen, Mikkel Friis Rossa and Emil Steenberg, Bech-Bruun
and fundamental rights. AI systems deemed to pose an unacceptable risk – for example, those involving cognitive manipulation, social scor- ing or real-time biometric surveillance in public spaces – will be banned. High-risk systems such as autonomous vehicles, medical devices and critical infrastructure technologies will be allowed but subject to strict regulations, including test- ing, data documentation, and human oversight. AI systems with limited or minimal risk will face fewer requirements, mainly around transparency – for example, notifying users when interacting with AI and allowing them to disengage. According to the suggested legislation, compa- nies that do not comply with the rules risk being fined. There are different levels of fines, as fol- lows. • For violations regarding prohibited AI sys- tems or applications, fines may amount to as much as EUR35 million or 7% of annual global turnover, depending on which amount is highest. • AI systems’ failure to meet the other require- ments of the EU AI Act may result in fines of up to EUR15 million or 3% of their total worldwide annual turnover. • If companies provide incorrect information about the use of AI in a system or application, fines may amount to as much as EUR7.5 mil- lion or 1% of annual global turnover. The influence of AI on due diligence in M&A is poised to be profound as it becomes increas- ingly embedded in business operation. The due diligence process will need to evolve in order to address critical issues such as the utilisation of AI in processing personal data, the creation of IP through AI, and the potential vulnerabili- ties associated with a company’s dependence on AI systems. This evolution necessitates a
more thorough assessment of AI-related risks and compliance considerations during the M&A process. IP as a valuable asset IP is a critical asset in the technology sector and its significance is further amplified in M&A trans- actions. Companies that possess robust IP port- folios, including patents, trade marks and copy- rights, are particularly appealing to potential buyers. These IP assets can offer a competitive advantage, safeguard innovations and generate revenue through licensing agreements. During the due diligence process, buyers will typically assess the target company’s IP assets to ensure that they are adequately protected and not subject to infringement claims. Compa- nies with well-maintained IP portfolios are in a stronger position to negotiate favourable terms and maximise the value of their assets in M&A transactions. In Denmark, technology M&A transactions are typically structured as share deals. In such arrangements, the relevant technologies and IP rights remain with the target company and no formalities are required to effectuate this indirect change of ownership. However, if the transaction involves transferring technologies and IP to a new legal entity or indi- vidual (for instance, in an asset deal, carve-out or similar transaction), Danish law imposes only limited formal requirements for the instruments governing such transfers and the necessary acts of perfection. In the context of IP transactions, transfer agree- ments can either involve a complete sale of the relevant IP rights or a limited licence, allowing the licensee to utilise the IP within a specified
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