Following the approval by three board members, including the owner of the football club, Allan K. Pedersen, the shares in FC Nordsjælland Holding, where also the shares in the football club FC Nordsjælland were located, were transferred in October 2008 from a holding company owned by Allan K. Pedersen, AKP Holding, for DKK 500,000 to another holding company also owned by him. Almost four months after the transfer bankruptcy proceedings were commenced against AKP Holding by the trustee, Attorney Pernille Bigaard.

In connection with the estate administration avoidance proceedings were initiated and an action for damages was brought against the purchasing company and the three board members who had approved the transfer of the shares as the estate was of the opinion that the transfer price of the shares was too low.

The Danish High Court found that at the time of the transfer the right transfer price of the shares was DKK 3 million, which is why the transfer was deemed to be a gift between related parties as Allan K. Pedersen owned both the selling company and the purchasing company. The Danish Supreme Court assessed the right price to be DKK 10 million and made the board members liable for the transfer of the shares having taken place without the board of directors having ensured that there was a sufficient and satisfactory basis for a decision.

The judgment illustrates that it is required that board members ensure that decisions to carry out transactions between related parties are made on a correct basis. A valuation prepared by the company auditor based on undocumented information from the company owner is insufficient basis for finding the board members not to be liable for having approved the transaction.

Attorney-at-law, partner Peter Schradieck conducted the case before the Danish Supreme Court. Please feel free to contact him if you would like to receive any further information.