When setting up a business, choosing the proper corporate format and structure from the outset is important. Your choice of corporate format and structure has significant bearing on the financing options available, the level of risk incurred, taxation and a future transfer of undertaking, amongst others. ADVODAN offers expert analyses of your business needs and the options available. We take it upon us to ensure that your business has the best possible legal foundation – both at the outset and in the long term.
The most commonly applied corporate formats in Denmark are limited liability companies. This is a generic term for several types of companies, including private and public limited liability companies, private companies, entrepreneurial companies and limited liability partnerships. Other ownership options include European Companies (SE), limited partnerships, partnerships, branches of foreign enterprises, etc.
All businesses in Denmark must be registered with the Danish Business Authority. This is a prerequisite for doing business in Denmark. This also applies to European Companies (SE) domiciled in Denmark as per their articles of association.
As the above registration has legal consequences, ensuring from that the legal foundation for your incorporation is of paramount importance.
Limited liability companies
A limited liability company may be formed by one or more founders and a founder may be either a legal entity or a physical person.
Limited liability companies, such as private or public companies limited by shares (”A/S”), private companies (”ApS”), and entrepreneurial companies (”IVS”), are governed by the Danish Companies Act. Danish corporate law is highly influenced by EU regulations. For this reason, you may already be familiar with some of the requirements and provisions found in Danish corporate law. However, the area is also governed by Danish national legislation.
What is the cost of setting up a limited liability company?
Setting up a company in Denmark is in itself not very costly. The capital requirements vary depending on the type of company.
As a general rule, the Companies Act sets out more requirements for private companies limited by shares than it does for private companies and entrepreneurial companies; however, private companies limited by shares also enjoy a number of advantages; for example, when it comes financing.
In terms of management requirements, a private company limited by shares must be managed by a board of directors or a supervisory board consisting of at least three members and at least one director. Private companies and entrepreneurial companies, on the other hand, may be managed by just one director.
Private companies may be used as vessels in all business sectors, but is particularly used by small and medium-sized businesses. The entrepreneurial company is usually used for start-up companies, in which the capital base is not of interest to any third parties.
It is not possible to list private companies and entrepreneurial companies on the stock exch