Introduction of the Public Register of Shareholders
The Danish Business Authority expects that the electronic Public Register of Shareholders will be introduced on 15 December 2014.
The object of the Public Register of Shareholders
The Danish Business Authority has announced that before long the Danish Parliament will consider a bill to amend the Danish Companies Act, making it possible to implement the electronic Public Register of Shareholders (section 58 of the Danish Companies Act).
In future, significant shareholdings and voting rights must therefore be registered with and made public in the Danish Business Authority's IT system.
In addition, any shareholder in public limited companies and limited partnership companies holding bearer shares that represent less than 5% in total of the share capital or of the votes in unlisted companies is under an obligation to register the number of bearer shares in a particular part of the Public Register of Shareholders (the Bearer Register) that is not open to the public.
The Public Register of Shareholders is introduced to create more openness and transparency about the ownership in Danish companies for the purpose of discouraging money laundering, creating more confidence in the companies and improving the public authorities' investigative tools in connection with white-collar crime.
Which companies are subject to the rules?
Initially, the Public Register of Shareholders becomes compulsory for limited liability companies, private limited liability companies, entrepreneurial companies and limited partnership companies.
The companies subject to the rules are then under an obligation to register information about ownership or pledges of 5% or more of the share capital or of the votes in the company in the Danish Business Authority's IT system (however, the pledgee is only to be registered if the pledgee controls and intends to exercise the voting rights).
Moreover, parties not holding shares by direct ownership or pledge but which have an interest in some other manner in the company (for example by holding voting rights under an agreement) must be registered in the Public Register of Shareholders.
Finally, a shareholder in an unlisted limited liability company or a limited partnership company holding bearer shares representing less than 5% in total of the share capital or of the votes in the company must register itself the number of such bearer shares in the non-public part of the Public Register of Shareholders; the Bearer Register.
It is noted for the avoidance of doubt that initially limited partnerships will not be subject to the Public Register of Shareholders but in future it is expected that the Register will become compulsory also for this type of company.
When are the registrations to be conducted?
The current Danish Companies Act already stipulates that anyone holding shares in a limited liability company must notify the company if the holding is minimum 5% of the share capital or of the votes in the company or any change occurs in a previously notified shareholding to the effect that the 5%, 10%, 15%, 20%, 25%, 50%, 90% or 100% thresholds and the thresholds of one-third or two-thirds of the voting rights or of the share capital are reached or are no longer reached. The notification to the company must take place no later than two weeks after one of the thresholds has been crossed (but if the company is listed, the notification must take place as soon as possible).
In future, companies will be under an obligation to register such information in the Public Register of Shareholders.
Any subsequent changes in the registered information must be registered no later than two weeks after the company has received the information.
The registration relating to bearer shares must also take place no later than two weeks after the transfer of the shares and both the purchaser and the seller are subject to such duty.
What is to be registered as a minimum?
The shareholders' and the pledgees' total holdings in companies of shares and votes must be registered in intervals in the register (meaning that only the threshold that has been crossed is to be registered, not the exact holding).
The date of the acquisition and the number of bearer shares must be specified in connection with the registration by the holder of bearer shares.
In connection with the registration of their holdings the shareholders and the pledgees are to be identified by
- their name, Company Registration (CVR) No and registered office if they are legal persons and by
- their name, address and Civil Registration No if they are natural persons.
Corresponding unambiguous identification applies to foreign legal or natural persons (for example a foreign legal person's Tax Identification Number can be used).
A shareholder must be an independent legal entity; a natural person or a business. It means that single proprietorships, personally owned small businesses and branches cannot be registered as shareholders in the Public Register of Shareholders.
The registrations are made on www.virk.dk.
Registers of shareholders can be kept by using the IT system
Another feature of the Danish Business Authority's new system, which is not open to the public, can be used by companies on a voluntary basis to keep the compulsory register of shareholders.
The register of shareholders is a list of all the company's shareholders and pledgees and it is not required that the register of shareholders is made public; it only has to be available to the public authorities (and to an employee representative if relevant).
The introduction of the register of shareholders does not change the company's obligation to keep the register of shareholders and the only thing that is new is the possibility of keeping the register of shareholders by using the Danish Business Authority's IT system.
Interim provisions
In connection with the implementation of the Public Register of Shareholders an interim arrangement is introduced, meaning that companies established before 15 December 2014 must make the registrations no later than on 15 June 2015. It means that in general existing companies have six months to make the compulsory registrations.
However, any changes in the information subject to registration which take place on 15 December 2014 or later must always be registered in compliance with the two week rule mentioned above irrespective of when the company was established. Correspondingly, companies established on 15 December 2014 or later must register the information no later than two weeks after the establishment.
The public's access to the Public Register of Shareholders will be opened on 15 June 2015 and any failure to comply with the duty of registration is punishable by a fine.
What does the Public Register of Shareholders entail at this point in time?
At this point in time companies do not have to take any action as the adoption of the rules awaits the consideration by the Danish Parliament.
Plesner will distribute another newsletter as soon as the provisions of the Danish Companies Act about the Public Register of Shareholders have been adopted and it is completely clear when the rules will come into effect.
Plesner recommends that the required registrations are made as soon as possible after the introduction of the Public Register of Shareholders and that clients contact Plesner to get help to make the registrations as quickly as possible.
The introduction of the Public Register of Shareholders is also a good opportunity for companies to remind the company's shareholders of the duty to notify the company of any transfer of ownership or pledging no later than two weeks after the transfer of the ownership or the pledging when the above thresholds are crossed. As written above, the company is under an obligation to register such information in the Public Register of Shareholders.
It is emphasised that the information extracted from the Public Register of Shareholders does not necessarily reflect the actual ownership and pledging even if the person making the registrations in the IT system is subject to liability. One of the reasons is that the Danish Business Authority does not check the registrations and as mentioned above pledgees are only registered when they get control over and at the same time intend to exercise the voting rights.
Finally, it should be mentioned that the usual perfection procedures in respect of the shareholders' and the pledgees' perfection of rights in respect of third parties are not affected by the introduction of the Public Register of Shareholders. It means that the parties acquiring shareholder rights to and pledges on shares must make sure that the relevant perfection procedures are observed outside the Public Register of Shareholders.