DENMARK Law and Practice Contributed by: Poul Guo, Martin Søndergaard, Patricia Rasch and Jonas Miller Rasmussen, Moalem Weitemeyer
ensure that management aligns with agreed- upon objectives. 3.7 Contractual Protection In a Danish start-up or growth company financ - ing round, the representations and warranties typically cover the following areas: • legal status and corporate power; • no conflict; • issued shares/equity instruments; • financial statements and, in some cases, management accounts;
• firstly, seek recourse against the company; and • secondly, seek recourse against the founders’ holding companies. Additionally, founders’ personal liability is typi - cally capped at one year’s net salary.
4. Government Inducements 4.1 Subsidy Programmes
In Denmark, several government and quasi-gov - ernment initiatives are designed to incentivise equity financing in growth companies. The EIFO provides capital through loans or equi - ty investments to support companies’ develop - ment plans. Additionally, the Danish Growth Fund invests in private funds, which in turn invest in companies, and also directly provides equity investments in start-ups with significant growth potential. 4.2 Tax Treatment In Denmark, the tax treatment of VC investments generally follows standard corporate tax rules but includes key distinctions aimed at encourag - ing investment. Participation Exemption for Corporate Investors Corporate investors benefit from the participa - tion exemption, which makes capital gains and dividends on qualifying shares tax-free. Tax Incentives for Start-Ups Start-ups can take advantage of R&D tax deduc - tions and equity incentives under Section 7P, which allow for tax deferral on employee share schemes. These incentives support VC invest - ment, innovation and talent attraction in early-
• position since the accounts date; • real property and other assets;
• IP rights (IPR) and IT; • GDPR compliance; • material agreements; • related party transactions; • employees and pension; • insurance; • tax matters; • regulatory compliance; • no insolvency; • litigation; and • disclosed information.
According to Danish market standards, the maturity of the company influences the extent of representations and warranties – the more mature the company, the more extensive the warranties. Notably, similar to M&A transactions, the representation and warranty catalogue in Denmark is generally less extensive and com - prehensive than in jurisdictions such as the USA. Recourse and Founder Liability In pre-seed and early seed rounds, it is custom - ary for the founder team to bear personal liabil - ity, subject to a claim hierarchy where investors must:
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