In the past few years, many countries, including Denmark, have adopted rules restricting the possibility for foreign companies and individuals to directly or indirectly acquire ownership interests or control of companies in the countries concerned.

The Danish FDI regime

The Danish FDI regime is among the most far-reaching in the world.

The Danish FDI rules imply that many investments in and agreements with Danish companies in a wide range of sectors considered to be particularly sensitive, made by foreign companies or individuals as well as foreign-controlled Danish companies, require prior authorisation from the Danish Business Authority or possibly the Danish Minister for Industry, Business and Financial Affairs.

The particularly sensitive sectors are:

• Companies in the defence sector, including companies which develop or produce weapons or other technology for military use, or which provide services essential to the Danish Defence.
• Companies within IT security functions or the processing of classified information, including companies which develop or produce products with IT security functions, or which provide services that are used to process classified information.
• Companies that produce "dual use" products, i.e. products, which can be used for both civil and military purposes. 
• Companies within other critical technologies, i.e., companies that develop or produce technologies which have a similar critical potential to weapons and dual-use products, including artificial intelligence, robotics, semiconductors, 3D printing, aerospace, industrial energy storage technologies, quantum and nuclear technology.
• Companies within critical infrastructure, i.e., companies necessary to maintain or restore functions deemed critical to society, including functions within energy, information and communication technologies, transport, preparedness and protection of civilians, health, social conditions, drinking water and food, wastewater and refuse collection, finance and economy, and education and research. Potentially, any company which is directly or indirectly necessary to maintain or restore a function deemed critical to society may be considered to be active within critical infrastructure, i.e., also suppliers or sub-suppliers to companies active within these functions.

The rules apply to both direct and indirect investments in the form of (i) possession of or control over shares, (ii) possession of or control over voting rights, and (iii) so-called "similar control by other means", which covers, inter alia, acquisition of assets and long-term loans. 

The requirement for prior authorisation applies to acquisitions of at least 10% of the shares or voting rights in a Danish company or the acquisition of similar control by other means, as well as in the case of an increase of the shares or voting rights to 20%, 1/3, 50%, 2/3 and 100%. The prior authorisation requirement also applies to the creation of new companies in the sensitive sectors (so-called "greenfield investments").

The rules also apply to so-called "special economic agreements", which include certain joint ventures, supplier agreements, operating agreements and service agreements. It is a requirement that the agreements entail decisive influence over the Danish company. In the case of supplier agreements, operating agreements, and service agreements, this can for example be fulfilled if the agreement is entered into for a longer period than 24 months or is irrevocable for a longer period than 12 months.  

In the case of investments in and agreements with Danish companies in all other sectors than those that are particularly sensitive, the Danish Business Authority may, for a period of up to 5 years after implementation, initiate an investigation and require notification of the investment or agreement if there is a risk that it may constitute a threat to national security or public order. Voluntary notification of the investment or agreement is also possible in such cases. 

Plesner has built up extensive practical experience in applying the Danish FDI rules and assists Danish and foreign client on all aspects on the rules, inter alia, with the following:

• Assessments of authorisation requirements 
• Applications for authorisation of investments in and special economic agreements with Danish companies in particularly sensitive sectors
• Notification of investments in and special economic agreements with Danish companies in other sectors than those that are particularly sensitive
• Requests for pre-screening from both Danish companies and potential foreign investors
• Informal consultations with the Danish Business Authority on the interpretation of the rules
• Advice on process planning

Through the Association of Danish Law Firms' (Danske Advokater) special committee, Plesner has participated in discussions with the Danish Business Authority in relation to drafting the ministerial orders, which determine the central concepts of the rules.

Plesner has also authored the chapter on the Danish rules on FDI screening in the International Bar Association's Foreign Direct Investment guide.

Moreover, in cooperation with the Danish Business Authority, we participated in a webinar on "Foreign investments in your company - learn more about the new rules" ("Udenlandske investeringer i din virksomhed - bliv klogere på de nye regler") hosted by the Danish Chamber of Commerce in September 2021. 

FDI regime in other countries

Investments in a company may not only require notification under the FDI regime of the country in which it is established, but may also require notification in other countries where the company has subsidiaries or branches, or where the company or its subsidiaries have turnover. The latter is the case in the UK.

Plesner has extensive experience in screening for (possible) notification requirements in other countries, and if the screening shows that an investment or agreement will require or may require approval in one or several other countries, Plesner can provide contact to a local legal liaison.

Information on the FDI regime in other countries can be found in the International Bar Association's Foreign Direct Investment guide.