The rules on mergers are contained in the following legislation:
The Danish Competition Act contains rules to ensure that mergers are not conducted so as to exclude effective competition on the market.
Types of merger
According to the Competition Act, a merger exists when:
- two or more previously independent companies amalgamate into one company;
- one or more persons who already control at least one company, or purchase units or shares in one or more companies, by agreement or otherwise, acquire direct or indirect control over all or part of one or more other companies;
- a joint venture is established to perform all the functions of an independent business in the long term (an independently-operated joint venture).
The key issue is whether there is a change in or transfer of control at the company.
Merger by incorporation
Merger by incorporation (figurative merger) happens when two companies merge, and one of the companies ceases trading without being liquidated and transfers all its assets and liabilities to the other company, which continues trading.
When a company takes over another company; this may be a takeover of the whole company or of a part of it. The part of the company that is not taken over continues to exist as an independent company after the merger.
Merger by incorporation happens, for example, when a company is dissolved and all its assets and liabilities are transferred to another company. This is called a figurative merger.
Merger by setting up a new company
Merger by setting up a new company (actual merger) happens when two companies merge and continue trading as a new (joint) company.
A merger can also happen when two or more previously independent companies amalgamate to become a new company. The merging companies then cease trading as independent legal entities.
This is called an actual merger.
A merger can be both between companies that compete in the same market (horizontal merger), and between companies that are active in different parts of the supply chain (vertical merger).
Buying an existing company, with an already established structure, can be a good way of expanding your business.
When the merger is finally decided upon by the general meetings of the participating companies, notification is sent to the Danish Business Authority together with the minutes of the general meeting and any new statutes.
A merger plan must be prepared for each company participating in the merger. The merger plan must be sent to the Danish Business Authority within 4 weeks.
The companies' management must prepare merger report.
An assessor (in practice an auditor) must prepare an evaluation report showing whether the remuneration for shares in the relevant company is reasonable and properly justified, and a creditors' report showing that all participating companies' creditors will be adequately insured after the merger.
The Danish Business Authority will publish the fact that the companies have started merger proceedings, immediately after it receives the above (at least the merger plan and creditors' report).
The company can make a final decision on whether to adopt the merger at a general meeting, no sooner than 4 weeks after the Danish Business Authority has published the merger plan, etc.
When a merger exceeds the threshold values for merger control in the Danish Competition Act, which are:
- total annual turnover of at least DKK 3.8 million in Denmark and at least two of the participating companies with a total annual turnover in Denmark of at least DKK 300 million; or
- at least one of the participating companies has a total annual turnover in Denmark of DKK 3.8 million, and at least one of the other participating companies has a total global annual turnover of at least DKK 3.8 million,
This must be reported to the Danish Competition and Consumer Authority. Mergers that are covered by the Danish Competition Act rules on notification obligations may only be implemented once the Danish Competition Council has given its approval.
The merger is reported by completing a special form, which can be found on the Danish Competition and Consumer Authority website.
The companies are responsible for ensuring that the notification is complete and correct. The periods in the Danish Competition Act for considering a merger only start to run from the date when the Authority has received all the information and thus the complete notification.
Assessment of the merger by the competition authorities
The Danish Competition Council approves mergers and can intervene in any merger that significantly impedes effective competition.
Publication of merger plan and creditors' report (at least) no later than 4 weeks after the decision.
The final implementation cannot be decided upon by the companies' general meetings sooner than 4 weeks after publication.
A notification must be sent to the Danish Business Authority, which then finalises the merger.
Changes to the company's statues must be reported to the Danish Business Authority. This can be done online on Virk.dk.
The Startvaekst portal contains comprehensive information about start-ups, business operations and growth.
The following websites provide information on bussiness and tax legislation relating to the purchase and sale of businesses:
For further information on buying and selling shares in companies whose shares are listed for trade in a regulated market, please visit the following websites: