Repeal of rules regarding shareholder loans and other amendments to the Danish Companies Act

Repeal of rules regarding shareholder loans and other amendments to the Danish Companies Act

On 19 December 2024, the Danish Parliament has adopted the amendment acts L71 and L72 regarding amendments to the Danish Companies Act (in Danish: selskabsloven) and other Danish laws. Among other amendments, L71 and L72 implement the following key initiatives:

Equity crowdfunding for Danish private limited liability companies
New rules are introduced according to which Danish private limited liability companies (in Danish: anpartsselskaber) will be entitled to offer shares to the public, either (i) by way of so-called “equity crowdfunding” through an approved equity crowdfunding platform pursuant to the rules of the Crowdfunding Regulation (requiring that the value of the offer does not exceed EUR 5 mio. calculated over 12 months), or (ii) as a public offer of shares conducted by the company itself without any limitations with respect to the value of the offer, provided that the offer meets at least one of four criteria set out in L72 (for instance, that the offer is addressed solely to ‘qualified investors’).

Capital requirement for Danish private limited liability companies
The minimum capital requirement for Danish private limited liability companies is reduced from DKK 40,000 to DKK 20,000.

Shareholder loans
The rules regarding shareholder loans as set out in Sections 210-212 of the Danish Companies Act are repealed. This will allow companies to provide loans (or other financial assistance) to its shareholders and members of its management, as well as to shareholders and management members of the company’s parent company, among others, without having to adhere to the requirements set out in Section 210(2) of the Danish Companies Act, including the requirement that a decision to provide such financial assistance must be resolved by the general meeting (or the board of directors based on an authorization).

However, such shareholder loan etc. will still be subject to the self-financing rules (in Danish: selvfinansieringsreglerne) and the general capital protection provisions in Danish Companies Act, including that the management is obligated to ensure that such shareholder loan etc. is prudent taking into consideration the company’s financial position. Additionally, the existing rules regarding the tax treatment of shareholder loans are unchanged.

The amendment acts L71 and L72 take effect as from 1 January 2025, however the effective date of the new capital requirement of DKK 20,000 for Danish private limited liability companies is not yet determined but is expected to be as soon as possible in 2025.

The amendment act L71 can be found here.

The amendment act L72 can be found here.

Tags:  Venture Capital