DENMARK Law and Practice Contributed by: Poul Guo, Martin Søndergaard, Patricia Rasch and Jonas Miller Rasmussen, Moalem Weitemeyer
Going forward, investors in companies listed within the past seven years, as well as newly listed companies, will have the option to apply realisation-based taxation. This change provides a significant liquid - ity advantage, as companies and investors are not required to pay tax on unrealised gains. As stated, it is particularly beneficial for founders and early investors, who are often subject to IPO lock-up periods, restricting their ability to sell shares immediately after listing. 6.3 Pre-IPO Liquidity IPOs remain relatively uncommon for start-ups in Denmark, primarily due to stringent regulatory requirements and the high costs associated with public listings. When companies do pursue an IPO, they typically consider Nasdaq Copenha - gen or other European exchanges, depending on company size, industry focus and investor interest. The timeline for an IPO is shaped by factors such as the company’s growth trajectory, market conditions and regulatory preparedness. Pre-IPO Liquidity Considerations There is a growing recognition of the need for pre-IPO liquidity, enabling early investors and employees to realise returns before a formal exit event. However, creating a structured secondary market presents challenges, including: • regulatory compliance; • valuation complexities; and • potential impacts on company control and confidentiality. To navigate these challenges, company-facil - itated tender offers can serve as a strategic solution. This approach allows the company to repurchase shares or facilitate sales to approved
investors, providing liquidity while maintaining oversight and stability in the shareholder base.
7. Regulation 7.1 Securities Offerings
VC transactions in Denmark are primarily gov - erned by the Danish Companies Act and the Danish Capital Markets Act, ensuring share - holder protection and market efficiency. For larger transactions involving multiple inves - tors or employees, compliance with the Danish Alternative Investment Fund Managers Act (the “AIFM Act” ) may be required. Unlike some juris - dictions, Denmark does not provide a private placement exemption under AIFM rules, mean - ing prior regulatory approval is needed to market such funds. Denmark maintains an open policy for foreign VC investments, though the Danish Investment Screening Act (DISA) requires pre-approval for investments in critical sectors such as: • defence and IT security; • critical infrastructure (eg, energy, telecoms); and • financial agreements with national security implications. 7.2 Restrictions Foreign VC investors generally face few restric - tions in Denmark. However, the Danish foreign direct investment (FDI) screening framework has been increasingly enforced over the past year, particularly concerning Chinese and non-EU/ EEA investors. FDI approval is required for investments where non-EU/EEA investors acquire 10% or more of
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