DENMARK Law and Practice Contributed by: Morten Jensen, Elise Ross-Hansen, Frederik André Bork and Paula Grønlund, Bruun & Hjejle
8.2 Special or Ad Hoc Committees In a public takeover, it is not common for the board of directors to establish special or ad hoc committees. Corporate mergers between one or more listed companies are rarely seen, but in such cases it is common to establish a special committee to: • negotiate the deal and plan for integration; • assess separation issues and synergies; and/ or • handle conflicts of interest. 8.3 Business Judgement Rule Case law in recent years has strongly indicated the application of the business judgement rule under Danish Law. In cases concerning man - agement liability, the Danish Supreme Court has stated that the court should be cautious regard - ing holding management liable when a business judgement has been made. This caution presup - poses that the management was acting solely in the interest of the company and that the busi - ness judgement was made on a well-informed basis. Although there is no case law concerning the business judgement rule in takeover situations, it is presumed that the same caution would apply under those circumstances. 8.4 Independent Outside Advice Any transaction – private or public – will gener - ally require external legal involvement. Financial advisers will usually also be involved together with an accountant. In public M&A transactions, it is common for the management of the target to retain independent financial advisers to issue fairness opinions and provide support concerning valuation issues.
8.5 Conflicts of Interest The principles of conflict of interest among direc - tors and managers are well established, and are regulated in the Danish Companies Act. Under the Danish Companies Act, no member of the board of directors or the executive board may take part in the process concerning an agreement between the limited liability company and the member themselves, or in discussions regarding lawsuits against the member them - selves. Furthermore, a member is not allowed to participate in discussions regarding agree - ments between the limited liability company and any third party, or in discussions about lawsuits against a third party, if the member has a mate - rial interest which may conflict with the interest of the company. While the rules of conflict of interest do not apply to shareholders, the members of the manage - ment appointed by a majority shareholder may be in a conflict of interest in situations where the interests of the limited liability company and the majority shareholder are in conflict. The conse - quences are that a member of the management may be obliged to withdraw from the board in consideration of certain transactions. Advisers of the company will usually ensure that conflict considerations are made prior to their agreeing to be retained in the first place.
9. Defensive Measures 9.1 Hostile Tender Offers
Hostile tender offers are permitted in Denmark, but they are not common since bids usually fol - low a formalised auction process and (friendly) negotiations with the board of directors of the target company.
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