DENMARK Law and Practice Contributed by: Poul Guo, Martin Søndergaard, Patricia Rasch and Jonas Miller Rasmussen, Moalem Weitemeyer
3.6 Corporate Governance In addition to exercising influence through their ownership rights by voting at the general meeting, a VC investor would typically secure additional rights in a shareholders’ agreement to influence the management and affairs of the venture. Board Representation and Decision-Making VC investors often secure seats on the compa - ny’s board of directors, allowing them to partici - pate directly in strategic decision-making. Board representation ensures that investors can over - see management actions and contribute to the company’s long-term direction. Approval Rights (Reserved Matters) Investors may require approval rights over cer - tain major corporate decisions, ensuring that their interests are protected. These reserved matters typically include: • amendments to the company’s governing documents; • issuing new shares or financial instruments; • changes to the capital structure; • modifications to business operations; • taking on debt; • mergers or demergers; • acquisitions or disposals of assets; • dividend distributions; • signing significant contracts; • making substantial investments; and • appointing or removing key executives. Information Rights Investors customarily obtain information rights, granting access to financial statements, budg - ets and strategic plans. Regular reporting obliga - tions and the right to inspect company records allow investors to monitor performance and
Market Practice and Standardisation While Denmark does not have a set of manda - tory VC templates, market practice frequently draws inspiration from Nordic model documents and internationally recognised frameworks, par - ticularly in deals involving cross-border inves - tors. Legal counsel typically tailors agreements to align with Danish corporate law, local investor expectations and company-specific considera - tions. 3.5 Investor Safeguards In Denmark, VC investors secure various pro - tections in downside scenarios, such as liqui - dation, to prioritise their returns over founders, employees and other stakeholders. Liquidation preferences ensure that investors recover their capital – often with a predefined return – before distributions to common shareholders. While non-participating preferences remain the market standard, recent conditions have led to a growing prevalence of participating preferenc - es, which allow investors to reclaim their initial investment and then participate in the remaining proceeds. Anti-dilution provisions are also common, with broad-based weighted average adjustments being the preferred mechanism to prevent own - ership dilution in downrounds, typically exclud - ing shares issued under employee incentive plans. Additionally, investors usually secure pre- emption rights, allowing them to maintain their stake by subscribing to new equity issuances before external investors. Depending on the deal dynamics, investors may also receive “super pre-emption” and right-of-first-refusal rights, ensuring that only the investor and holders of preferential shares can exercise these rights.
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