Corporate Governance in Denmark
The Danish corporate governance regime consists of hard law as well as soft law provisions. The Danish Companies Act (DCA),[1] which came into force in 2010, establishes the general governance regime for Danish private and public limited liability companies (in Danish: anpartsselskaber and aktieselskaber). For public limited liability companies, the DCA allows for a choice of board structure of either a board of directors or a supervisory board, and it establishes the role and position of the board members vis-à-vis the shareholders. This includes the decision-making powers of the board vis-à-vis the general meeting. The annual general meeting is considered omnipotent. Thus, the general meeting can decide on any matter concerning the company where the power is not allocated by law to either the board of directors or the executive board. The shareholders’ right to participate actively in the general meeting is partly set out in the first Shareholder Rights Directive (SRD I),[2] but historically, Danish company law has granted very extensive rights to shareholders in relation to the general meeting,[3] and in some respects, the DCA extends the rights given to shareholders beyond the requirements set by the Directive.[4] The revised Shareholder Rights Directive (SRD II)[5] has been transposed into Danish law, and the amendments came into force on 10 June 2019. However, a number of the provisions do not come into force until later. The provisions have been implemented as amendments to several existing acts, and that is the reason why the provisions on transparency of institutional investors and asset managers are found in a number of different acts, including the Financial Business Act[6] and the Managers of Alternative Investment Funds Act.[7]
Even though the DCA is the primary act with regard to corporate governance, governance regulation in regard to listed companies is also covered in the Danish Financial Statements Act (DFSA), the Danish Capital Markets Act (DCMA),[8] and the Market Abuse Regulation (MAR).[9] A number of executive orders supplement DCMA and MAR. The DFSA requires listed companies to publish a management statement, a non-financial CSR statement, and a corporate governance statement. Also, MAR has some effect on corporate governance as it includes rules on, inter alia, insider lists, disclosure of insider information and trading notifications from persons with managerial responsibilities. DCMA regulates listed companies’ publication requirements in general, including the publication of prospectuses, major shareholding and takeovers.
As regards soft law, in November 2017, the Danish Committee on Corporate Governance adopted a revised set of Recommendations on corporate governance.[10] The Recommendations are considered best practice guidelines for the management of listed companies, and the purpose of the Recommendations is to ensure transparency to give investors and other relevant parties the opportunity to assess the performance of the company.[11] The Recommendations on corporate governance are supplemented by a set of Stewardship Principles aimed at increasing transparency as to how the individual investor chooses to exercise stewardship activities and ultimately promoting listed companies’ long-term value creation.[12] Although they are only recommendations, the Recommendations on corporate governance are anchored in the DFSA, which requires listed companies to submit a statement on how they apply the Recommendations on corporate governance (the “comply or explain” principle).[13] The Stewardship Principles are also applied on a “comply or explain” basis, but contrary to the Recommendations on corporate governance, the application of these principle is purely voluntary. It is expected that both sets of recommendations will be updated again in 2020. This is mainly due to the transposition of the SRD II into Danish law and the influence on the overall corporate governance framework. The Stewardship Provisions in the SRD II will take effect in Danish law for financial years commencing on 1 January 2020.
Nasdaq Copenhagen is the only regulated market in Denmark where a public limited liability company can have its shares admitted to trading. For companies listed here, Nasdaq Copenhagen has issued ’Rules for issuers of shares’,[14] which must be observed. These rules provide disclosure requirements for companies listed on the stock exchange, which supplement hard law and soft law requirements on, inter alia, disclosure of financial reports, remuneration and other corporate governance issues.
[1] https://danishbusinessauthority.dk/sites/default/files/danish_companies_act.pdf
[2] Directive 2007/36/EC, amended by Directive (EU) 2017/828.
[3] Jesper Lau Hansen, Nordic Company Law, p. pp. 73-75 (DJØF Publishing2003).
[4] For instance, shareholders can ask any questions concerning the company at the general meeting and not only questions relating to the agenda for the general meeting, cf. CA sections 78 and 102.
[5] Directive EU 2017/828 amending Directive 2007/36/EC as regards the encouragement of long-term shareholder engagement, 2017 O.J. L 132/60.
[6] Consolidating Act no. 457 of 2 April 2019.
[7] Consolidating Act no. 1166 of 19 September 2018.
[8] Act No. 650 of 8 June 2017.
[9] Regulation (EU) No. 596/2014 of 16 April 2014.
[10] https://corporategovernance.dk/english
[11] Recommendations on Corporate Governance, 2017, p. 3.
[12] Stewardship Code, 2016, p. 3.
[13] DFSA, Section 107b.
[14] https://www.nasdaq.com/solutions/rules-regulations-copenhagen.
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Additional Resources:
https://thelawreviews.co.uk/edition/the-corporate-governance-review-edition-9/1189444/denmark
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Contact:
Hanne Søndergaard Birkmose hsb@law.au.dk
Marina Bitsch Madsen mbm@law.au.dk
Also:
Komitéen for god Selskabsledelse
Sekretariatet:
Erhvervsstyrelsen
Langelinie Allé 17
2100 København Ø
Tlf.: 35 29 10 00
E-mail: cg-komite@erst.dk
