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LEGAL NEWS - New rules on minimum share capital requirements from January 2014

13. December 2013

In the spring of 2013, the Danish parliament passed a bill regarding the Danish Companies Act, in which the most significant changes are a reduction of capital requirement for private limited companies and an introduction of entrepreneurial companies (iværksætterselskaber).

As of January 1st, 2014 private limited companies, that previously were subject to a requirement of minimum nominal share capital of DKK 80,000, will have their minimum nominal share capital requirement lowered to DKK 50,000. The reason for the change is for Denmark to come in line with other European countries that already has lower capital requirements.

The introduction of entrepreneurial companies is another amendment to the Danish Companies Act coming into force as of January 2014. With the introduction of this new type of company it becomes possible to found a private limited liability company with almost no minimum share capital. As a general rule entrepreneurial companies will be covered by the rules applicable to other private limited companies.

Entrepreneurial companies can be established with a share capital of DKK 1. It is, however, an obligation that at least 25 % of the company’s profit is retained until the share capital amounts to DKK 50,000. Once there is a share capital of DKK 50,000, the entrepreneurial company may be re-registered as a private limited company or take out returns.

Although there are lower capital requirements, the management is also in this case responsible for ensuring that the finan­cial resources of the entrepreneurial company are adequate at all times and that the company has sufficient liquidity to meet its current and future liabilities as they fall due.

The entrepreneurial companies are inspired by a similar form of companies that are established in Germany and where this form has been widely applied without leading to a significant increase in the number of bankruptcies etc.

The introduction of entrepreneurial companies in Denmark is a consequence of another proposed amendment – also with effect as of 1st of January 2014 – which is to remove the possibili­ty of forming SMBA’s, also known as enterprises with limited liability, under the Danish Consolidated Act on Certain Commercial Undertakings (lov om visse erhvervsdrivende virksomheder).

For further information please do not hesitate to contact MAQS Law Firm , Attorney-at-Law Niels Gade-Jacobsen, or phone 33 12 45 22.