New possibilities for Danish entrepreneurs - a bill to amend the Danish Companies Act has just been introduced

Reduced capital requirement for Danish private limited companies

The bill proposes to reduce the minimum share capital requirement of Danish private limited companies from DKK 40,000 to DKK 20,000.

The proposed amendment to the capital requirement for Danish private limited companies means that in future it will be possible to establish Danish private limited companies with a share capital of DKK 20,000. The payment can either be in cash or by payment in kind if the value is the equivalent of DKK 20,000. Existing Danish private limited companies will also be able to reduce the share capital to the minimum share capital under the rules of the Danish Companies Act on capital reductions and thereby release restricted reserves.

The current minimum share capital requirement of Danish private limited companies is fixed in section 4(2) of the Danish Companies Act which stipulates that the share capital of Danish private limited companies must be minimum DKK 40,000, and minimum 25% of the share capital must be paid up at any time but minimum DKK 40,000, see section 33(1) of the Danish Companies Act.

It is the assessment of the Danish Minister for Industry, Business and Financial Affairs that the result of the reduction in the minimum share capital requirement of Danish private limited companies will mean that it will be easier, especially for entrepreneurs that cannot meet the capital requirement of DKK 40,000, to establish a company.

Public offer of shares

The Danish Ministry of Industry, Business and Financial Affairs proposes to extend the legal framework for raising capital by allowing equity crowdfunding for Danish private limited companies. Equity crowdfunding is a type of financing where a company raises capital through an offer of shares to the public. It is therefore investments in unlisted shares. It is prohibited in Denmark to offer shares in private limited companies to the public under the current rules. As a consequence, Danish private limited companies may not use equity crowdfunding.

The bill makes it possible for private limited companies to offer shares to the public through crowdfunding platforms. The shares may also be offered to the public through other platforms if a number of specific conditions have been met including the thresholds for exemption from the obligation to publish a prospectus. It will make it possible for private individuals to invest in entrepreneur companies in return for payment in shares and thereby make it easier for start-ups to raise capital.

It is proposed that the legislative amendment is to enter into force on 1 January 2025. 

Advisory services

The new legislative amendments will make it possible for Danish private limited companies to raise capital through a public offer of shares by for instance equity crowdfunding. The companies are to comply with a number of specific requirements to ensure that the offers are made in a controlled framework and protect potential investors.

We are very experienced in providing advice on company law, company formation, raising of capital and capital reductions and are able to help navigating the new possibilities.