Denmark

On 1 July 2021, a cross-sectoral system for the screening of foreign direct investments (FDI) entered into force.

The Danish Investment Screening Act

The Danish Investment Screening Act (Act no. 842 of 10 May 2021) applies to investments and agreements made after 31 August 2021.

The Investment Screening Act involves:

1. a mandatory authorisation regime for investments in particularly sensitive sectors. It applies to all foreign investors who gain "direct or indirect possession or control of at least 10 per cent  of the shares or voting rights, or equivalent control by other means". 
2. a voluntary cross-sectoral notification regime. This regime applies to investors outside the EU/EFTA who gain "possession of or control over at least 25 per cent of the shares or voting rights, or equivalent control by other means" in undertakings other than those operating in particularly sensitive sectors.

Investments must be understood very broadly and include, for example, asset acquisitions and long-term loan agreements.

"Danish" undertakings may also be considered foreign undertakings within the meaning of the Investment Screening Act. This means that agreements or investments made, for example, between two Danish public limited companies may be subject to the Investment Screening Act.

Both regimes provide that "special financial agreements" entered into by Danish undertakings with a party outside the EU/EFTA are also covered if the foreign party thereby obtains control of or significant influence over the Danish undertaking.

The Act is supplemented by three executive orders and a circular:

The Application Order

The Application Order determines the scope of the Act, for example with regard to the particularly sensitive sectors, and with regard to when the Act applies to special financial agreements and greenfield investments (formation of new undertakings).

The Procedural Order

The Procedural Order details the required information and procedures when submitting pre-screening requests, mandatory applications and voluntary notifications. In addition, it outlines rules for calculation of shareholding, for exemption of intercompany transactions, and for determining when anything can be considered "equivalent control by other means" other than control of shareholding or voting rights.

The Confidentiality Order

The Confidentiality Order provides that all authorities receiving information in connection with the administration of the Investment Screening Act must observe confidentiality in respect of that information.  

The Cooperation Circular

The Cooperation Circular specifies the assistance provided by the various regulatory authorities to the Danish Business Authority as well as the Business Authority's own tasks in relation to the Danish Investment Screening Act.

The Danish War Material Act

In addition to the Investment Screening Act, the Danish War Material Act (Act no. 1004 of 22 October 2012 – in Danish) is also effective. The War Material Act is administered by the Danish Ministry of Justice. If an investment is covered by the War Material Act, the Investment Screening Act does not apply.

The War Material Act applies where foreign investors acquire certain rights over Danish undertakings that manufacture:

1. material that has been constructed for military use and is not used for civil purposes
2. firearms and objects appearing to be firearms (except firearms specifically constructed for hunting and sports purposes)
3. ammunition that can be used for military purposes
4. powders and explosives
5. components and parts that have been constructed for use in the material set out in 1-4 and not for civil use.

Undertakings that do not directly fall under the above rules may be exempted from particular provisions in the Danish War Material Act, including the rules on investment control. An exemption can for instance be granted to undertakings engaged in the spray-painting or heat treatment of components.

If a foreign investment results in breach of any of the thresholds listed in the War Material Act, the investment must be notified and approved before it is effected.

The War Material Act does not contain any specific provisions on form, notification procedure or notification fee.

Regulation establishing a framework for the screening of foreign direct investments into the Union

The European Union has adopted a Regulation (EU) 2019/452 (effective as of 11 October 11), which is directly applicable in all member states.

The Regulation creates a cooperation mechanism between all member states and the European Commission when screening FDIs. The member states are required to inform each other and the Commission about all FDIs undergoing screening in their jurisdiction, which enables member states and the Commission to comment on the relevant screening.

Member states must give due consideration to such comments from other member states and/or any opinion given by the Commission. Furthermore, the Commission and any member state may request information from and submit comments to another member state if they believe that an investment taking place in the jurisdiction of the other member state should undergo screening.

If you have any questions to the above, please do not hesitate to contact Kromann Reumert's FDI team.

The information on this page has been prepared as a service to our clients and other interested parties to give them an introduction to FDI regulation. The information serves as a guide only and cannot be regarded as, or replace, legal advice.