[ESTABLISHING A BUSINESS ENTITY IN DENMARK]
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ESTABLISHING A BUSINESS ENTITY IN DENMARK 1 TYPES OF BUSINESS ENTITIES There are several forms of business entities in Denmark and there are a wide range of possibilities for establishing a business entity in Denmark. The most suitable entity depends on a variety of factors, such as nature of the business, the expected activity level, the extent of liability and tax matters. The following will review different possibilities of establishing business entities in Denmark. 1.1 Limited Companies The limited companies are characterised by the shareholders liability is limited to the capital invested in the company. The shareholders will not be liable for the obligations of the limited company. The shares in the Public Limited Company (Aktieselskab – A/S) may be offered to the public. It is only the Public Limited Company which can be listed on a regular or alternative market. The Public Limited Company is also the most regulated entity in Denmark. The nominally share capital in the Public Limited Company must be at least 400,000 DKK and the nominally share capital in the Private Limited Company (Anpartsselskab - ApS) must be at least 40,000 DKK. The Private Limited Company is quite similar to the Public Limited Company, but the Private Limited Company is less regulated, and the company cannot be listed on a regular or alternative market. The limited companies are the most common entities for foreign investors. 1.2 Sole Proprietorship A Sole Proprietorship (Enkeltmandsvirksomhed) can only be owned by one physical person. The entity is suitable for smaller business. The person who owns the entity is personally liable for the business, which implies, that the person is liable for all debt and obligations of the business. The person who owns the entity has
the full control over all business decisions. There are no capital requirements for establishing an entity as a Sole Proprietorship and there are only a few legal requirements. 1.3 Partnerships The partnerships can be organised with limited liability for the participants and with unlimited liability for the participants. Partnerships require more than one participant. The structure is more flexible than the limited companies. The different partnerships are tax transparent. The Partnership (Interessentskab – I/S) is a partnership of minimum two participants. The persons’ who own the partnership are personally liable for the business, which means the persons are joint and severally liable for all debt and obligations of the business. There are no capital or other requirements for the establishment of the partnership besides the partners having an agreement. The Limited Partnership (Kommanditselskab – K/S) requires two types of participants, the “Komplementar” which is the participant who is personally liable for the debt and obligations of the partnership and the “Kommanditist” which are the participant(s) who are limited liable and only liable for the contributed share capital. There are no capital requirements for the establishment of the Limited Partnership. The Partnership Limited by Shares (Partnerselskab – P/S) requires two participants, the “Komplementar” which is the participant who is personally liable for the debt and obligations of the partnership. The Komplementar will often be a limited company, which makes the liability illusory. The “Kommanditistaktionær” are participant(s) who are organised as shareholders in a Public Limited Company (A/S). The Partnership
ILN Corporate Group – Establishing a Business Entity Series
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