DENMARK Law and Practice Contributed by: Morten Jensen, Elise Ross-Hansen, Frederik André Bork and Paula Grønlund, Bruun & Hjejle
Certain targets will hold licences to conduct particular types of businesses – eg, debt collec - tion, telecoms, insurance and banking. Regula - tory approvals may be required when obtaining control of such businesses. 2.3 Restrictions on Foreign Investments The Danish Investment Screening Act applies to foreign direct investments made on or after 1 September 2021. The Danish foreign direct investment regime is based on EU Regulation (2019/452) on screening of foreign direct invest - ment, and implements a two-tiered screening mechanism: • a sector-specific mandatory filing obligation; and • a general (cross-sector) voluntary filing option. The mandatory filing obligation is triggered by foreign direct investments (covering all typical M&A deals, including greenfield investments, asset deals and long-term loans) where a non- Danish investor acquires “qualifying holding” in a Danish undertaking active within “particularly sensitive sector” . A qualified holding is the direct or indirect possession or control of at least 10% of either the shares or voting rights (as well as increases of holdings that result in the holding constituting or exceeding the thresholds of 20%, one third, 50%, two thirds or 100%), or equiva - lent control by other means. Equivalent control by other means covers, inter alia: • rights granting the power to make or approve decisions on significant managerial, financial, developmental or operational matters; and • rights to appoint or remove members of man - agement bodies.
The mandatory filing obligation is further trig - gered by “special financial agreements” entered between a non-EU investor and a Danish under - taking within “particularly sensitive sector” . Spe - cial economic agreements are joint ventures or operating, supplier or service agreements, whereby the investor gains control or significant influence over the Danish target. The five particularly sensitive sectors covered by the mandatory screening mechanism are: • the defence sector; • the sector for IT-security functions or pro - cessing of classified information; • the production of dual-purpose products; • other critical technology (consisting of 11 listed technologies, one of which the target must develop or manufacture in order to be a company within other critical technology); and • critical infrastructure (consisting of 11 listed subsectors, such as energy and healthcare, which are further divided into a number of socially important functions, for one of which the target must be necessary to maintain or restore in order to be a company within criti - cal infrastructure). The sector-specific, mandatory screening mech - anism applies to all non-Danish investors, while the voluntary screening mechanism applies only to non-EU/EFTA investors. It is the responsibil - ity of the foreign investor to file with the Danish Business Authority and provide comprehensive information and documentation regarding the investment, the target and the foreign investor. If the mandatory filing obligation is triggered, a standstill obligation applies until the Danish Business Authority has approved the invest - ment. There are no filing fees or execution for - malities (provided a qualified lawyer in Denmark makes the filing on the foreign investor’s behalf,
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