Denmark

Company Formation

In Denmark, a variety of limited companies, partnerships, limited partnerships, cooperative societies, etc. can be formed. The following, however, are the most commonly used.

Public Limited Company
A Public Limited Company ("aktieselskab" or "A/S") is a company limited by shares and governed by the Public Limited Companies Act ("aktieselskabsloven"). Such a company may be listed on the stock exchange.

Generally, the types of shares in the company can be ordinary shares and preferred shares. These two categories are often replaced by denominations such as "A" and "B" shares with A shareholders having priority rights to receive dividends and/or to participate in a distribution on a winding up. Each share must carry a vote. Corporate bodies may be shareholders of the company.

The company shall have both a Board of Directors and a management. The Board of Directors is elected at the annual ordinary general meeting by the shareholders. If the company has had an average of more than 35 employees over the previous three years, the employees may elect some of the board members. The Board of Directors employs the management. The Board of Directors must be composed of at least three members. The management must be composed of between one and three members. All members of the management and at least half of the members of the Board of Directors must be resident in Denmark. It is possible to apply to the Commerce and Companies Agency for an exemption in respect thereof. Citizens of EU countries are always exempted without application but are nevertheless counted as nonresidents if they are not actually resident in Denmark.

The company has an obligation to keep accounting records and produce annual accounts in accordance with the Bookkeeping Act and the Annual Accounts Act incorporating relevant EU directives on company law. The company is required to prepare annual accounts showing with sufficient clarity the assets and liabilities of the company and profit or loss for the period the accounts cover. The company is also required to issue an annual report including supplementary information with respect to the important developments which have occurred subsequent to the end of the accounting year, a statement of the prospects of the company, and a statement regarding research and development activities of the company.

A certified copy of the audited annual accounts, possible group accounts, the annual report, and information on where the accounts were approved must be filed with the Commerce and Companies Agency.

Private Limited Company
A Private Limited Company ("anpartsselskab" or "ApS") is also a company limited by shares and is subject to the Private Limited Companies Act which is very similar to the Public Limited Companies Act. Share certificates are not issued and can therefore not serve as negotiable instruments which implies that the company cannot be listed on the stock exchange. It is not required that a share in the company carry a vote. A board of directors is not required, and the company can be headed by one or more directors (management). If the company has no board of directors, the management is appointed directly at the ordinary general meeting.

Branch offices can be opened in Denmark by companies incorporated in the EU, companies incorporated in countries which in the opinion of the Ministry of Commerce grant Danish companies the same right, or companies incorporated in a branch treaty state. There are no capital requirements for the branch of the foreign company. The branch office is subject to Danish law with respect to its business in Denmark.
A branch manager must be appointed and given a power of attorney granting authority to act on behalf of the branch. The foreign company must no later than five months after the expiry of the financial year of the foreign company file with the Commerce and Companies Agency a certified and audited copy of the foreign company's annual accounts.

A shipping partnership is a partnership founded for the purpose of owning a single vessel. Shipping partnerships are subject to the Merchant Shipping Act. The partners can be individuals and/or legal entities and are personally liable for the obligations of the shipping partnership. However, each partner's liability is limited pro rata to the partner's share in the vessel. The shipping partnership shall elect a managing owner. The managing owner must be either an individual resident in Denmark or a limited company provided that the limited company has a board of directors composed of at least two thirds Danish subjects resident in Denmark. The managing owner has authority on behalf of the shipping partnership to conduct the ordinary business of the partnership. It is outside the ordinary business to sell or mortgage the vessel or to charter the vessel for more than one year.

The managing owner shall keep separate accounts in respect of the management of the shipping partnership. The managing owner must present the accounts covering each calendar year within two months after the end of the calendar year. Profits and losses are divided between the partners pro rata.

Limited Partnership
A limited partnership ("kommanditselskab" or "K/S") is a partnership with a number of limited partners personally liable for the obligations of the partnership, however, limited to a specific amount and with a general partner with unlimited liability. The general partner generally has authority on behalf of the partnership. The partners of the partnership can be individuals as well as limited companies.
A public or private limited company, a limited partnership or branch office must be registered at the Commerce and Companies Agency while a shipping partnership is registered at the Ship Registry.