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Danish CorporateFinance Laws 2013

CONTENTS

1 PREFACE

2 INTRODUCTION

3 THE COMPANIES' ACT

4 THE FINANCIAL STATEMENTS ACT

5 THE SECURITIES TRADING, ETC. ACT

6 THE ADMISSION REQUIREMENTS ORDER

7 THE PROSPECTUS ORDER ("MAJOR" OFFERS)

8 THE PROSPECTUS ORDER ("MINOR" OFFERS)

9 THE EC REGULATION ON PROSPECTUSES

10 THE MAJOR SHAREHOLDERS ORDER

11 THE TAKEOVER BIDS ORDER

12 THE EC DIRECTIVE ON TAKEOVER BIDS

13 THE EC REGULATION ON BUYBACK PROGRAMMES AND STABILISATION

14 ORDER ON THE ISSUER'S DUTY TO PROVIDE INFORMATION

15 THE MARKET ABUSE ORDER

16 ORDER ON REPORTING OF TRASACTIONS IN SECURITIES

17 ORDER ON THE PRODUCTION AND DISSEMINATION OF CERTAIN INVESTMENT ANAL-

YSES

18 RULES FOR ISSUERS OF SHARES - NASDAQ OMX COPENHAGEN A/S

19 CORPORATE GOVERNANCE RECOMMENDATIONS

20 THE COMPETITION ACT

21 MEMO ON DANISH (AND EU) MERGER CONTROL

22 INTRODUCTION TO DANISH TAX LAWS RELATED TO TRANSFERS OF ASSETS OR

SHARES AND REORGANISATIONS

23 MEMO ON HUMAN RESSOURCE ISSUES RELATED TO TRANSFER OF SHARES AND AS-

SETS

24 MEMO ON ACQUISITION FINANCE

25 INSTITUTIONS - CONTACT DETAILS

1

DANISH CORPORATE FINANCE LAWS 2013

PREFACE

The Danish market for corporate market transactions has been and is significantly impacted by the re-

percussions of the financial crisis, although the market has recently shown signs of recovery. In the pri-

vate M&A market, many structured sales processes have been abandoned and others have resulted in

transactions in which the seller has maintained a significant stake. Deal activity was not least con-

strained due to the huge economic uncertainty facing businesses creating difficulties in predicting with

any certainty revenues and results for the coming 12 months, let alone attaching a fair value to them.

However, the market is showing signs of slow recovery. In the first part of 2013, a number of PE exits

have taken place. Also, an IPO is now being seriously considered again by a number of PE funds as a

(partial) exit possibility.

Considering the overall market, Plesner's corporate finance practice had a good past 18 months. We

acted in a total of 59 Danish (or Denmark related) M&A transactions, as reported to Mergermarket.

Plesner had significant involvement in most of the large transactions that occurred during this period,

including Montagu's divestment of Unifeeder, Advent's acquisition of KMD and the sale of Tiger to EQT.

In the same period, we assisted major clients with significant listings of various types of debt instru-

ments.

Thus, Plesner is continuing to be the law firm (since 1 January 2004) credited with more significant

Danish M&A transactions than any other law firm.

Nearly all cross-border transactions involving Danish companies are documented and negotiated in the

English language. However, as the relevant Danish legislation is written in Danish, the need for common

terms of reference arises. To meet this need, we have since 1998 published or updated this publication,

which includes English translations of the most important Danish laws and regulations of relevance to

corporate finance transactions, as well as a brief introduction to the subject. It is our hope that this

book may serve as an efficient tool for our foreign clients in connection with Danish corporate finance

transactions.

Whilst this book provides an overview of Danish legislation pertaining to corporate finance, it is no sub-

stitute for detailed legal advice in relation to any particular transaction, and the book should not be act-

ed or relied upon in any specific situation without appropriate legal advice. Plesner has no responsibility

for the contents of this book and does not make any warranty, express or implied, regarding the con-

tents.

The contents of this book are up to date to 1 June 2013.

2

2We gratefully acknowledge the assistance we have received from the Danish Financial Supervisory Au-

thority, NASDAQ OMX Copenhagen A/S, the Danish Business Authority and the Danish Competition and

Consumer Authority for letting us use their translations into English of the various Danish corporate fi-

nance laws and regulations.

Plesner is one of the largest commercial law firms in Denmark with more than 200 lawyers. Plesner's

M&A and Corporate Finance practice group deals with a broad spectrum of transactions, including cross-

border mergers and acquisitions, takeovers, bids and trading in, as well as offerings and issues of, se-

curities, restructuring and the establishment of joint-ventures. Our clients are mainly investment banks,

corporations and financial investors.

PLESNER

Corporate Finance

Copenhagen

1 July 2013

3

INTRODUCTION

Danish corporate finance regulations do not consist of a single set of regulations or

a "corporate finance" code. The regulations applicable to companies and corporate

finance transactions are set out in a variety of acts and executive orders, as well as

EU legislation in the form of directives implemented in Danish law and regulations

directly applicable in Denmark. Further, companies and corporate finance

transactions are subject to practice in the Danish corporate finance market. The

most important acts, executive orders and EU legislation are the following:

Companies Act,

etc.

The provisions concerning the incorporation and organisation of public limited

companies and private limited companies are organised under and subject to the

provisions of the Companies Act (Chapter 3). The Companies Act was adopted on

12 June 2009 and entered partly into force on 1 March 2010. On 1 March 2011 all

provisions except for provisions relating to an electronic shareholders' register,

which are awaiting the implementation of a new IT-system at the Danish Business

Authority, have entered into force.

A number of other types of corporate entities exist in Denmark. In the context of

the organisation of Danish businesses, the most important of these other types is

commercial foundations.

Financial

Statements

Public limited companies, private limited companies and commercial foundations

are subject to the Financial Statements Act (Chapter 4), setting out statutory

accounting principles. The statutory accounting principles are supplemented by the

guidelines in the Danish Accounting Standards issued by the Danish Institute of

State Authorised Public Accountants (FSR), as well as the International Accounting

Standards.

Securities

Regulation

The Securities Trading, etc. Act (Chapter 5) is the principal regulatory

instrument with respect to trading (whether on a regulated market or not), and

registration of securities. The act lays down the general provisions concerning

requirements for offering of securities, offering of securities listed on a regulated

market (a stock exchange or an authorised market place), disclosure requirements,

including major holding notifications, mandatory and voluntary takeover bids and

prohibition against abuse of inside information and price manipulation (market

abuse). Additionally, the Securities Trading, etc. Act contains the provisions and

regulations related to stock exchange business, authorised market place business,

and clearing business.

The Securities

Trading, etc. Act

and Executive

Orders

Several important and detailed executive orders have been issued by the Danish

Financial Supervisory Authority pursuant to the Securities Trading, etc. Act: The

Admission Requirements Order (Chapter 6) sets out the requirements applicable

to the listing of securities on a regulated market. The Prospectus Order ("Major"

Offers) (meaning admission of securities to listing or trading and public offer of

securities with a value of more than EUR 5 million) (Chapter 7) deals partly with

the exemptions from the obligation to publish a prospectus, and partly with the

format and contents of a prospectus, in order to ensure that the information given

to investors about the issuing company and the securities is correct, complete and

4

not misleading. Importantly, the format and contents of such a prospectus is now

regulated in detail by the Prospectus Regulation, as defined further below. The

Prospectus Order ("Minor" Offers) (Chapter 8) contains similar prospectus

requirements with respect to public offering of unlisted securities having a value

between EUR 1 million and EUR 5 million. There are no prospectus rules regarding

offers of unlisted securities of a value below EUR 1 million.

The Prospectus

Regulation

The Commission Regulation (EC) No. 809/2004 of 29 April 2004 as amended by EC

Regulations 1787/2006 and 211/2007 (on complex financial history), and EU

Regulations 486/2012 and 862/2012 (the "Prospectus Regulation") is contained in

Chapter 9.

Stake-building The Major Shareholders Order (Chapter 10) supplements the Securities Trading,

etc. Act which contains provisions requiring holders of listed shares to notify the

Danish Financial Supervisory Authority and the company whenever certain

thresholds of either voting rights or share capital ownership stake are exceeded or

no longer exceeded. The Order itself contains provisions relating to the calculation

of major holdings and the notification thereof.

Takeover Bids

Order

The Takeover Bids Order (Chapter 11) supplements the provisions in the

Securities Trading, etc. Act with respect to the obligation to submit a mandatory

bid and the content hereof, and also contains provisions applicable to a voluntary

public takeover offer.

Buy-Back

Programmes and

Stabilisation

The EC Regulation on Buy-Back Programmes and Stabilisation No. 2273/2003

of 22 December 2003 (Chapter 13) is directly applicable in Denmark, and it

contains provisions regulating and implementing the exemptions for share buy-back

programmes and stabilisation of financial instruments.

Disclosure Obliga-

tions for Listed

Companies

Pursuant to the Securities Trading, etc. Act and the Executive Order on the Is-

suers Duty to Provide Information (Chapter 14), a listed company must dis-

close information concerning the company that, if such information was made pub-

lic, would be likely to have a significant effect on the value of its shares. Such in-

formation must be made public as soon as possible. However, the board is, at its

own responsibility, entitled to postpone the disclosure of inside information, pro-

vided that the postponement is in the interest of the company, and that the inside

information is not and has not been leaked in whole or in part to an unauthorised

person or to the press.

Rules Governing

Securities Listing

on NASDAQ OMX

Copenhagen A/S

The Securities Trading, etc. Act authorises the board of a company operating a

regulated market to issue supplementary provisions on terms and conditions for

admission of securities to trading or listing, the contents of prospectuses and dis-

closure obligations. Pursuant to such authority, NASDAQ OMX Copenhagen A/S,

which is currently the only stock exchange in Denmark, has issued the Rules for

Issuers of Shares on NASDAQ OMX Copenhagen A/S (Chapter 18).

Corporate

Governance

The Recommendations for Good Corporate Governance (Chapter 19) contain

"soft law" recommendations, and are primarily directed towards listed companies

and companies aiming to obtain a listing through an initial public offering. It is the

intention of the Committee on Good Corporate Governance that the recommenda-

tions will also prove to be an important tool for other non-listed enterprises in

5

whole or in part.

Antitrust All mergers, acquisitions and joint ventures must comply with Danish competition

law and EU competition law. Danish competition law is to a large extent based on

comparable EU competition law.

Merger Clearance Mergers, acquisitions and joint ventures, where the combined aggregate turnover

in Denmark of all the undertakings concerned exceeds DKK 900 million, will in

many cases be subject to the prior approval of the Danish Competition Authority in

accordance with the Competition Act (Chapter 20). Chapter 21 contains a Plesner

memorandum Memo on Danish and EU Merger Control.

Tax There exists no single set of regulations or codes regulating tax issues in

connection with mergers, acquisitions or other capital market transactions.

However, included in Chapter 22 is a Plesner memorandum on Introduction to

Danish Tax Laws related to transfers of assets or shares and reorganisations.

Human Resource

Issues

A Plesner memorandum on Human Resource Issues Related to Transfer of Shares

and Assets is included in Chapter 23.

Acquisition

Finance

Included in Chapter 24 is a Plesner memorandum Memo on Acquisition Finance.

Impact of EU

Legislation

EU legislation has a material impact on the regulation of Danish corporate finance

laws and regulations. Danish law on companies, financial statements, securities

regulation, antitrust regulation, labour market regulation, etc. contains

implemented EU legislation. In addition, a number of EU regulations have direct

applicability in Denmark. In this guide, references are made to material applicable

EU legislation where we have deemed it relevant.

6

Plesner Danish Corporate Finance Laws contains general and introductory

information on the following subjects:

1 CORPORATE STRUCTURES ................................................................. 4

2 REGULATION OF PUBLIC LIMITED COMPANIES (A/S).............................. 5

3 COMMERCIAL FOUNDATIONS ........................................................... 13

4 FINANCIAL STATEMENTS ................................................................. 14

5 EXCHANGE AND INVESTMENT CONTROL............................................. 16

6 LABOUR MARKET............................................................................ 16

7 COMPETITION RULES ...................................................................... 18

8 MERGERS AND ACQUISITIONS ......................................................... 19

9 PUBLIC TAKEOVERS........................................................................ 23

10 COMPULSORY ACQUISITION OF MINORITIES (SQUEEZE-OUT) ............... 33

11 INSIDER DEALING AND MARKET MANIPULATION ................................. 33

12 FINANCIAL ASSISTANCE ................................................................. 36

13 PUBLIC OFFERINGS OF SECURITIES .................................................. 38

14 INSTITUTIONS............................................................................... 40

1 CORPORATE STRUCTURES

Public and Private

Companies

Commercial businesses in Denmark are most commonly organised as either public

limited companies ("Aktieselskaber" or "A/S") or private limited companies

("Anpartsselskaber" or "ApS").

Other Corporate

Structures

Business is also carried out in co-operative limited companies ("Andelsselskaber

med begrnset Ansvar" or "AmbA"), commercial foundations ("erhvervsdrivende

fonde"), partnerships ("Interessentskaber" or "I/S"), limited partnerships

("Kommanditselskaber" or "K/S"), and partnerships limited by shares

("Partnerselskaber" or "P/S").

Minimum Share

Capital

An A/S must have a minimum share capital of DKK 500,000, while an ApS must

have a minimum share capital of DKK 80,000. At least 25% of the share capital

must be paid upon subscription of the shares, however at least DKK 80,000

(meaning that for an ApS this provision will only be relevant if the ApS has a share

capital of more than DKK 80,000 and only has full effect if the share capital is at

least DKK 320,000). The possibility to pay in 25% applies to the nominal value only

and to cash contributions only. Accordingly, any share premium agreed in

connection with a cash subscription of capital (whether at the time of foundation or

a subsequent capital increase) and contributions made in kind must be paid in full.

The share capital may be stated and paid up in Euro provided that the amount in

Euro is equivalent to the minimum amount required in DKK as at the date of the

decision to incorporate the company.

7

Amendments to

the Danish

Companies Act

In the end of February 2013, the Minister of Business and Growth submitted a bill

to amend the Danish Companies Act. The bill mainly contains technical

adjustments, however some significant amendments have been proposed, including

reduction of the minimum capital requirement for an ApS from DKK 80,000 to DKK

50,000, introduction of entrepreneurial companies ("Ivrkstterselskaber" or

"IVS") with a share capital of DKK 1, and optional partial payment of premium in

an ApS. The bill was finally adopted on 16 May 2013, and the Danish Business

Authority is authorised to decide when the Act is to enter into force, which has not

been determined yet.

A/S and ApS

Differences

The Companies Act differentiates between an A/S and an ApS in various areas, with

the underlying principle that an ApS is less regulated and in consequence has a

higher contractual freedom, including:

An A/S must have a management system with a board of directors

("bestyrelse") consisting of at least three (physical) persons and with a man-

agement board ("direktion") consisting of one or more members undertaking

the day-to-day operations; or a supervisory board ("tilsynsrd") consisting

of at least three (physical) persons and a management board ("direktion").

Members of the management board may serve as members of the board of

directors, but cannot hold the position of chairman or deputy chairman of the

board of directors. In addition, the majority of the members of the board of

directors cannot be members of the management board in the company as

well. In companies with a supervisory board, members of the management

board cannot be members of the supervisory board. In contrast hereto, an

ApS may have a one-tier management system consisting of a management

board only, unless the employees are entitled to representation on the

board, in which case the ApS is also required to have a board of directors or

a supervisory board (see below for provisions related to board representa-

tion). When the word "board" is used in this introduction, it covers board of

directors as well as supervisory board.

An ApS cannot allot bearer shares and the shares in an ApS cannot be listed

on a stock exchange or other regulated markets.

The A/S is the most common limited liability company for large businesses in

Denmark. In practical terms most businesses likely to be interesting to a foreign

entity considering making an acquisition in Denmark are incorporated as an A/S.

However, subsidiaries of US companies will often be (re)incorporated as an ApS for

tax purposes, as we understand that an ApS can "check-the-box" for US income tax

purposes, whereas this is not the case for an A/S.

This introduction to Danish Corporate Finance Laws deals primarily with the

provisions and regulations governing the A/S.

2 REGULATION OF PUBLIC LIMITED COMPANIES (A/S)

Public Limited

Company

The A/S is a limited liability company, ownership of which is conferred by the

holding of issued shares. Equal rights are attached to all shares, unless the

8

company is incorporated with or subsequently resolves to have more than one class

of shares. If so, the articles of association shall set out the different rights of the

share classes. Shares carrying weighted preferential voting rights are often

designated as "A" shares, while ordinary shares (one share one vote) are referred

to as ordinary "B" shares. Shares in an A/S may be issued as either registered or

bearer shares. It is also possible to have shares without any voting rights.

Registered shares may in the articles of association be subject to restrictions on

the transferability or conditions with respect to compulsory acquisition.

Share Certificates The central governing body of the company may decide that share certificates shall

be issued. If the shares are traded on a regulated market, share certificates cannot

be issued. Shares in an A/S traded on a regulated market must be issued

electronically and registered with VP SECURITIES A/S ("Vrdipapircentralen"). If

the company has already issued share certificates, the company may resolve to

withdraw and annul the share certificates after having given three months' notice

by an announcement to the shareholders. The shareholders cannot exercise any

other rights than the right to receive dividend and other payments from the

company and subscribe for newly issued shares pursuant to the statutory pre-

emption right (if not waived by qualified majority by the general meeting) until the

share certificates have been returned to the company. This, however, does not

apply to negotiable shares or bearer shares.

Shareholders'

Register

Companies must maintain a shareholders' register containing details of the owners

of registered shares. Further, it may also include details concerning the owners of

bearer shares, in order for allowing notices of general meetings and copies of the

company's annual reports to be sent to the current shareholders. The transferee of

a registered share may not exercise the rights as shareholder unless the

transferee's name has been recorded in the register of the shareholders, or the

transferee has notified the company of its acquisition and proven its title (which

limitation shall, however, not apply to the right to receive dividend and other

payments from the company, or the right to subscribe for newly issued shares

pursuant to pre-emption rights). Entry into the shareholders' register does not

affect the legal status of bearer shares or change the requirements for their

transfer. Shareholders have the right to vote on the basis of newly acquired shares

at any subsequent general meeting. In listed companies the right to vote is

determined based on the shareholdings at the registration date, being one week

prior to the general meeting. Further, the articles of association may provide that

shareholders are required to notify the company that they will attend the general

meeting no later than three business days before the date of the meeting.

Shareholders must report to the company when their ownership of either share

capital or voting rights in the company reach 5%. Further, any changes in an

existing ownership whereby thresholds of 5, 10, 15, 20, 25, 50, 90 and 100% as

well as 1/3 and 2/3 of the company's share capital or voting rights are reached or

no longer reached must be reported. Once the new IT-system of the Danish

Business Authority has been implemented and the applicable provisions of the

Companies Act have entered into force, the company must file the information with

the public ownership register administered by the Danish Business Authority.

Details concerning the owners of bearer shares corresponding to less than 5% of

the share capital or voting rights in the company must also be registered, when the

system has been implemented). The public will hereafter have access to detailed

9

information about the ownership and voting rights of all companies, even though

the actual shareholders' register will not be publicly available.

Listing Shares in an A/S can be listed on NASDAQ OMX Copenhagen A/S, another

regulated market or on an alternative market. Shares of all listed companies must

be freely transferable. Shares listed on NASDAQ OMX Copenhagen A/S are

registered, and transfers are settled, through the VP SECURITIES A/S

(Vrdipapircentralen). If an A/S is listed, all or some classes of shares in the

company may be listed, and it is not required to obtain a listing on NASDAQ OMX

Copenhagen A/S for all classes of shares. However, if a class of shares is listed, all

shares within such class of shares must be listed.

Voting, Ownership

and other

Restrictions

Provisions may exist in the articles of association of Danish companies limiting the

number of votes a single shareholder can exercise at general meetings to a

specified percentage of the issued share capital, irrespective of such shareholder's

total shareholding (absolute voting restrictions). Some companies listed on

NASDAQ OMX Copenhagen A/S have adopted such absolute voting restriction,

which primarily works as a defence mechanism.

An alternative absolute restriction is an absolute ownership restriction, which limits

the total number of shares that a single shareholder can own. The articles of

association may also restrict any shareholder from acquiring shares in excess of a

defined threshold without consent from the company's governing body or others.

In each of these circumstances, unsolicited takeover bids are less likely to succeed.

Unless otherwise stipulated in the articles of association (which will, indeed, often

be the case), shares held by associates or persons acting in concert with a

particular shareholder will not be treated as part of a single holding. However, the

voting rights of shares held by a company, which a person controls, will be

included when calculating the ownership thresholds determining the

abovementioned reporting obligations.

A and B Shares

and Foundations

In several large companies listed on NASDAQ OMX Copenhagen A/S, the original

owners have retained high-voting class A shares in the company and only made

low-voting ordinary class B shares available to the public in the initial public

offering. A shares are sometimes owned by a commercial foundation ("fond"),

which may be restricted by its charter from freely disposing of the A shares.

Control of the company is therefore due to remain with the foundation, unless and

until the foundation wishes and obtains permission to amend its charter. Over the

recent years some of the large commercial foundations have obtained permission

to amend their charters.

In practice, the charter of commercial foundations holding shares in listed

companies is one of the most important (defensive) structures preventing

takeovers of Danish listed companies, although its popularity has declined as a

result of objections from institutional investors and corporate governance reforms.

Reference is made to the comments on the Takeover Directive.

Shareholders'

Agreement

An alternative defence against unsolicited offers for a listed company is a

shareholders' agreement. Shareholders' agreements may for example contain

10

transfer restrictions related to the exercise of voting rights, require that the

transfer of shares (possibly beyond a certain percentage) is subject to the prior

approval of the other parties or the board, or contain provisions on tag-along or

drag-along rights or pre-emptive rights. However, shareholders' agreements are

not binding on the company. Consequently, such defensive measures must be

included in the articles of association if the provisions are to be directly enforceable

against the company and third parties.

Transfer of Shares The transfer of shares in an A/S is regulated by the articles of association of the

company and/or a shareholders' agreement between the shareholders of the

company. The articles of association and/or a shareholders' agreement of an

unlisted company will often contain a pre-emption right (right of first refusal) for

existing shareholders when shares are transferred. Such provisions must also be

contained in the articles of association in order to be enforceable against the

company and third parties. For registered shares, the articles may also require that

the board approves any transfer before the transfer can be registered in the

shareholders' register. If so, the board is required to make the decision promptly

and if no notification is given within four weeks, consent is deemed granted. Such

provisions constitute a considerable obstacle to the acquisition of an unlisted

company where the support of the board of the target company is not forthcoming,

but if the majority of the shareholders wish to sell, the board can be replaced.

Breakthrough

Provisions of the

Takeover

Directive

The so-called breakthrough provisions of the Takeover Directive have been

implemented in the Companies Act. However, the provisions only apply where a

company has adopted the breakthrough provisions, which no listed company has

done so far. Accordingly, the provisions are not expected to have significant

practical implications.

Shareholders'

Decisions

According to the Companies Act, all business transacted at general meetings is

determined by simple majority of votes in the absence of any provision to the

contrary in the Companies Act or the articles of association. For example the

company's board is elected by simple majority (except for employee elected

members, who are appointed by the employees of the company and any Danish

subsidiaries, see further below). A simple majority accordingly provides a sufficient

majority operational control through the election of (all) shareholder elected board

members of the company, unless the articles of association provide otherwise.

Amendment

of Articles of

Association

Amending the articles of association requires a 'double' qualified majority of

shareholders in favour of the resolution holding two thirds of the share capital

represented at the general meeting, and two thirds of the votes casted (this double

requirement is important in companies with different classes of shares carrying

different voting rights). According to the Companies Act, certain amendments such

as those which restrict the free transferability of shares, or the right of

shareholders to receive dividend or capital distributions, must be adopted with a

higher qualified majority ranging from 9/10 to the consent from all affected

shareholders. For example, any resolution to increase the liabilities of the

shareholders towards the company must be adopted with the consent of all

shareholders whose liabilities are so increased. The stipulated majority

requirements are minimum requirements pursuant to the Companies Act. It is not

unusual for the articles of association to impose stricter qualified majority

requirements on some or all types of resolutions.

11

Where an amendment of the articles of association is proposed which would impair

the rights attached to a particular class of shares, the consent of two thirds of the

represented shareholders within this class is required at the general meeting.

The Companies Act contains a further restriction on the power of shareholders at

general meetings; namely, that no resolution passed at a general meeting may be

passed if its prima facie effect would be to confer on certain shareholders or third

parties an unfair advantage over other shareholders or the company. A similar

restriction applies to actions that can be taken by the board of a Danish company.

Increase

of Capital

A resolution to increase the issued share capital of a company requires the same

majority as an ordinary amendment to the articles of association, unless a higher

majority is required by the articles of association or unless the new shares are

subscribed for at a discount and the existing shareholders do not hve a pre-

emption right. Existing shareholders have a statutory pre-emption right to

subscribe for newly issued shares, if the shares are to be paid up in cash (but not if

the shares are paid by conversion of debt or in kind). This pre-emption right can be

rescinded by a shareholders' resolution with the same majority as is required to

adopt the capital increase (unless special majority provisions apply). Unless

specifically authorised by the general meeting adopting the capital increase, new

shares can only be subscribed for against cash payment. Where shares are to be

paid up otherwise than in cash or conversion of debt, generally, the consideration

paid to the company must be appraised. The board may be authorised by the

shareholders to issue and allot new shares under certain conditions, during a

period of up to five years from the shareholders' decision on the authorisation. The

subscription price per share cannot be less than the share's nominal value and

minimum 25 % of the nominal value together with the full share premium (if any)

must be paid up in connection with the subscription.

Management An A/S is managed by a board of directors ("bestyrelse") or a supervisory board

("tilsynsrd") consisting of at least three (physical) persons and by a management

board ("direktion") consisting of one or more (physical) persons. The board is

appointed by the general meeting with a simple majority, and may include persons

who are not residents of Denmark. The management board is appointed, and may

be removed, by the board of directors or the supervisory board. In companies with

a board of directors, the management board is responsible for the day-to-day

conduct of the company's business, but is subject to control by the board of

directors. One of the principal obligations of the board of directors is to consider

from time to time whether the financial position of the company is sound in the

context of the company's operations. Any action outside the company's ordinary

course of business must normally be sanctioned in advance by the board of

directors. The supervisory board has more limited powers than the board of

directors. The supervisory board does not have any influence on the business of

the company, but is purely a supervisory organ, monitoring that the management

board fulfils its obligations. A member of the management board cannot be a

member of the supervisory board.

Gender equality The Danish Parliament recently adopted a bill with the aim to create a more equal

share of men and women on the boards of directors of Danish companies. The bill

introduces new provisions in the Danish Companies Act and the Danish Financial

12

Statements Act, pursuant to which, inter alia, listed companies and large

commercial enterprises are required to set target figures and to prepare a policy

for gender equality in order to increase the share of the underrepresented gender

at companies' management levels in general. The companies must also report on

the status of fulfilment of these requirements in their annual reports. The new

requirements entered into force on 1 April 2013 and the reporting obligation is

applicable for financial years starting on 1 January 2013 or later.

Rules of

Procedure

The company's board is obliged to adopt specific rules of procedure relating to the

performance of its duties.

Employee Board

Representation

If a company has employed an average of at least 35 employees during the

previous three years, the employees are entitled to elect from amongst themselves

a number of members to the board. The employees may elect up to one third of

the total number of members and at least two members. An employee elected

member has the same powers, rights and duties as any other member of the board

of the company, but - subject to the continuous employment of the elected

employees - the shareholders cannot remove him or her during his/her four-year

term of election.

Board Members'

Liability

Formerly, Danish courts were reluctant to render board members liable for exercise

or lack of exercise of their powers and duties unless clear specific duties had been

breached. However, the trend appears to be moving towards a stricter liability for

board members. On 11 June 2004 the Supreme Court delivered a judgment holding

a board member liable for the losses of the company's creditors caused by the

board member's negligent behaviour, including the lack of taking adequate and

necessary actions in order for the board member to comply with his duties as a

board member. A Supreme Court judgment of 15 December 2004 held a board

member liable for damages for negligent failure to observe his duty to ensure that

there was substance in a specific investment project, subsequently revealed to be

worthless to the project investors. On 22 November 2006 the Supreme Court held

board members as well as management liable for breach of their duties to monitor

the company's financial situation and monitor the general affairs of the company.

The company had been operated in a way that the Supreme Court characterised as

clearly irresponsible, and the board members were ordered to pay damages to the

company. In another case on 14 May 2007, the Supreme Court ruled that a number

of members of the board of directors failed their duty to secure an equal division of

assets between the company's creditors in the event of bankruptcy. As a result of

this negligence the board members were held liable for losses incurred by the

creditors.

Board Duties A summary of the duties of the board and the management will necessarily be

incomplete, as much will depend on the company's specific circumstances and the

situation from time to time. However, the duties of the board generally include:

To consider whether the company's capital resources are appropriate consid-

ering the company's business at any time.

To adopt rules of procedure that must include, among others, provisions re-

garding the frequency of board meetings, voting procedures and constitu-

13

tion.

To adopt guidelines for the allocation of specific duties between individual

board members and any delegation of responsibility.

To adopt guidelines for bookkeeping, maintenance and safekeeping of books

and records as required by law, to follow up on plans, budgets, major trans-

actions, insurance cover, financing, cash-flow and special risks and also fre-

quently review and consider the auditors' minutes (reports to the Board) and

review interim/quarterly accounts as well as consider any discrepancies from

the budget for the relevant period and/or to instigate specific investigations

if the situation so requires.

To organise accounting, internal checks and controls.

To provide a statement on the annual report.

The board must ensure that it receives the information necessary for the board to

fulfil its duties, and the board is obliged to provide the auditor(s) with the

information considered important and necessary for the audit of the company.

The board of directors must further provide instructions to the management board,

which are commonly set out in written specific management instructions (where the

supervisory board shall only ensure that management conducts its duties properly),

perform the overall management duties and strategic management and ensure

proper organisation of the company's business.

Conduct of

Meetings of the

Board of Directors

and Supervisory

Board

Certain specifically defined board matters may be conducted in writing if it is

compatible with the nature of such matters. Meetings of the board may further be

held by use of electronic media (electronic meeting of the board), if consistent with

the performance of the duties of the board. However, a board member or a

member of the management board may at any time request that an oral discussion

takes place.

General Meetings

and Electronic

Communication

The shareholders' right to make decisions concerning the company shall be

exercised at the general meeting(s), which normally are to be held at the

company's registered address. Every shareholder is entitled to attend general

meetings and every shareholder has the right to speak at general meetings. A

shareholder who is prevented from attending a general meeting may vote by proxy

or - in listed companies - by postal vote. It is possible for a company to allow

shareholders to attend and vote at general meetings electronically, i.e. without

physical attendance. Depending on further requirements to be fulfilled pursuant to

the Companies Act, the general meeting may be held partially or completely as an

electronic general meeting.

Furthermore, a company may resolve to use electronic exchange of documents and

electronic mail in its communication with shareholders instead of submission or

presentation of papers.

Recommendations

for good

The Committee on Corporate Governances recommendations from 6 May 2013

comprise recommendations, which are primarily aimed at Danish listed companies,

14

Corporate

Governance

within the five subjects mentioned below.

Communication and interaction by the company with its investors and other stake-

holders. The Committee recommends that the shareholders' exercise of ownership

is facilitated and strengthened by the use of information technology and

authorisations. Further, it is recommended that the board adopts a policy regarding

the company's relationship with its stakeholders and ensures that the interests of

the stakeholders are respected in accordance with the company's policy. Also, it is

recommended that companies publish quarterly reports. Finally, it is recommended

that the board refrains from countering takeover bids on its own initiative.

Tasks and responsibilities of the board of directors. The Committee recommends

that the board establishes procedures for how the management reports to the

board, and that the board ensures relevant diversity at management levels. Also, it

is recommended that the board ensures that the company has a capital and share

structure ensuring that the strategy and long term value creation of the company

are in the best interest of the shareholders and the company. Moreover, the

Committee recommends that the board adopts a corporate social responsibility

policy.

Composition and organisation of the board of directors. The Committee recom-

mends that the board is composed so that it is able to execute its strategic mana-

gerial and supervisory tasks in an effective manner and in a constructive and quali-

fied dialogue with the management. Additionally, it is recommended by the Com-

mittee that the board regularly assesses whether its composition, including as re-

gards diversity in relation to gender and age, and the skills of its members, indi-

vidually and collectively reflect the requirements of the company's situation and

conditions. The Committee recommends, inter alia, that information concerning the

candidates and the recruitment criteria is made available for the shareholders when

election is on the agenda at the general meeting. The board must always act inde-

pendently of special interest, and it is recommended that at least half of the mem-

bers of the board are independent.

It is also recommended that the board establishes an evaluation procedure where

contributions and results of the board and the individual members, as well as col-

laboration with the management are annually evaluated. Further, the Committee

recommends that the board at least once a year evaluates the work and perfor-

mance of the management in accordance with predefined clear criteria, and that

the management and the board establishes a procedure according to which their

cooperation is evaluated annually.

Finally, the Committee recommends that the board appoints (i) an audit committee,

(ii) a remuneration committee to evaluate the remuneration policy in general and

the remuneration of the board and the management board and (iii) a nomination

committee to establish the necessary qualifications of members of the board and

the management and assess the overall structure of the management of the com-

pany.

Remuneration of management. The Committee recommends that the total remu-

neration be competitive and reasonable, and that the board establishes a remuner-

ation policy, which is approved by the general meeting and published on the com-

15

pany's website, and that information regarding the total remuneration granted to

each member of the board and the management is disclosed in the annual report.

Moreover, it is recommended that incentive pay programmes are transparent and

based on actual achievements over a period of time with a view to long-term value

creation.

Financial reporting, risk management and audits. The Committee recommends that

the board ensures effective risk management and effective internal controls. It is

recommended that the board reviews and accounts for the most important strategic

and business-related risks, risks in connection with the financial reporting as well

as for the companys risk management. It is recommended that the management

regularly identifies the most important risks and reports to the board about the de-

velopments in the most important risk areas.

Soft Law/

Comply-or-Explain

The Committee's recommendations are not legally binding, which complies with the

recommendations by the European Commission of May 2003 and October 2004.

However, the European Commission recommended that the annual reports of the

listed companies should contain a description of the listed companies' corporate

governance structures, practice and compliance or non-compliance with a relevant

code of conduct (the "comply-or-explain" principle). The "comply-or-explain" prin-

ciple applies to Danish listed companies, as NASDAQ OMX Copenhagen A/S has im-

plemented the recommendations into the disclosure requirements contained in the

Rules for Issuers of Shares on NASDAQ OMX Copenhagen A/S. Further, the princi-

ple is laid down in the Financial Statements Act.

3 COMMERCIAL FOUNDATIONS

Commercial Foun-

dations

A foundation has no shareholders or owners but only beneficiaries and is based on

a charter ("fundats" or "vedtgt"), which sets out the objects of the foundation,

the way in which the foundation shall be administered by the board of the founda-

tion, the way in which the board is elected (often by itself) as well as how the

board shall apply its means by distribution to the beneficiaries of the foundation.

Foundations engaged in commercial activities are so-called commercial foundations

("erhvervsdrivende fonde") and are governed by The Act on Commercial Founda-

tions, which includes a number of provisions similar to the ones applicable to Dan-

ish public limited companies (A/S) set out in the Companies Act. There are signifi-

cant Danish listed companies controlled by such commercial foundations, e.g.

Carlsberg.

Amendment of the

Charter

A question of particular interest when dealing with commercial foundations is

whether or not and to what extent it is possible to amend the charter of the foun-

dation. In this respect the Act on Commercial Foundations provides that, following

an application from the board of the foundation, the public body with authority to

supervise foundations ("Fondsmyndigheden") can recommend and approve

amendments to the provisions of the charter with the ultimate approval from the

Ministry of Justice. In recent years administrative practice has in some cases al-

lowed amendments of the objects of a foundation, as well as amendments of the

provisions related to a foundation's administration of its means etc. In all cases,

however, a balance is sought between the original interest and intent of the found-

16

er on the one hand and the long-term (financial) interest of the foundation on the

other hand.

Review of the Act

on Commercial

Foundations

In March 2012 the Minister of Business and Growth appointed a committee

"Erhvervsfondsudvalget" to review the Act on Commercial Foundations. The pur-

pose of the revision was to modernize the Act on Commercial Foundations in order

to ensure that the act is efficient, modern and creates a good and timely frame-

work for the commercial foundations. The work of the committee was concluded in

a report, published in December 2012, containing the committee's suggestion to a

revised Act on Commercial Foundations.

One of the essential elements in the report is the introduction of recommendations

on corporate governance for commercial foundations. The purpose of these recom-

mendations is to ensure proper management of the foundation and transparency

and insight into the work of the board of directors. The report contains 16 new rec-

ommendations concerning, inter alia, transparency, independence etc.

During the fall of 2013 the Minister of Business and Growth is expected to table a

bill which is based on the report from the committee.

4 FINANCIAL STATEMENTS

Enterprises regu-

lated by the Act

The Financial Statements Act applies to commercial enterprises supplying or

providing goods, rights, funds, services or the like for which they normally receive

consideration (except financial companies subject to the Danish Financial Business

Act). Enterprises regulated by the Companies Act, the Act on Commercial Founda-

tions and the Act on Certain Commercial Enterprises are always regarded as com-

mercial enterprises.

International Ac-

counting Stand-

ards (IAS)

The Financial Statements Act and subsequent amendments enable Danish enter-

prises to present annual accounts in accordance with the International Accounting

Standards (IAS). Importantly, all Danish companies listed on a regulated market

must pursuant to EC-Regulation 1606/2002/EC as subsequently amended present

consolidated financial statements in accordance with IAS.

Contents of the

Annual Report

The Financial Statements Act is meant to ensure that the annual report assists

shareholders and other stakeholders in making financial decisions. Accordingly, the

Financial Statements Act comprises extensive disclosure of the operating and fi-

nancial review, value-based accounting principles and additional requirements and

statements in particular with respect to listed companies and large and medium-

sized enterprises.

The objective of the Financial Statements Act is to make annual reports more in-

formative and forward-looking by including statements on e.g. resources of a non-

financial nature, risks and risk management, environmental issues and target fig-

ures for the share of the underrepresented gender at the management of the En-

terprise (see section 2 of this Introduction). In addition, the annual report shall in-

clude a statement by the management and the board or supervisory board on the

annual report, the auditors' report, the operating and financial review, the descrip-

tion of accounting policies, the financial statements, and any supplementary state-

17

ments.

The Building

Block Model

In order for the Financial Statements Act to comprise accounting provisions for all

enterprises (the so-called "building-block model" applies). The building-block mod-

el comprises the following:

Class D: Listed companies and state-owned enterprises.

Class C: Large (all enterprises not comprised by the definitions of small and

medium-sized enterprises) and medium-sized enterprises (balance sheet to-

tal between DKK 36 million and DKK 143 million, revenue between DKK 72

million and DKK 286 million, and number of employees between 50 and 250.

Two out of the three criteria have to be met for two consecutive financial

years).

Class B: Certain small enterprises which for two consecutive years do not

exceed two of the following criteria (i) a balance sheet total of DKK 36 mil-

lion, (ii) a revenue of DKK 72 million or (iii) a number of employees that ex-

ceed 50

Class A: Enterprises which are under no obligation to be audited but chooses

to do so voluntarily.

The structure means that enterprises, as a minimum, must comply with the provi-

sions of the accounting class to which they belong and with the ones of any pre-

ceding class.

Enterprises comprised by Class B may choose to have the auditing conducted ac-

cording to a specific declaration for small sized enterprises produced by the Danish

Business Authority.

The Danish Accounting Standards issued by the Danish Institute of State Author-

ised Public Accountants (FSR) supplement the Act and have been revised to reflect

the Act. Following their revision, the Danish Accounting Standards should be in

compliance with the corresponding IAS standards.

Financial State-

ments by Listed

Companies

Companies listed on NASDAQ OMX Copenhagen A/S or on another regulated mar-

ket comprised by reporting under class D must use IAS from the financial year

2005 in respect of the consolidated financial statements as set out in the Council's

Regulation 1606/2002/EC as subsequently amended by Regulation 1725/2003 and

other regulations on the application of IAS.

Information and

Transparency

On 26 June 2005 the Financial Statements Act was amended to implement the pro-

visions on information and transparency pursuant to the Takeover Directive. The

amendment has the effect that a company listed on NASDAQ OMX Copenhagen A/S

or on another regulated market shall list any information, which may affect the

company, in the management review in the annual report. This amendment is im-

plemented to create transparency in respect of the circumstances of the company

and thereby further the free trade of the company's shares. Such information in-

cludes, among other matters, voting rights of the shares and restrictions hereof,

the identity of major shareholders, possibility for the central governing body to in-

18

crease the share capital, major contracts with third parties containing a change of

control clause, and agreements between the company and members of the board,

the management, or the employees, regarding compensation to be paid to these

individuals, if they retire or if their position is terminated due to a takeover bid.

Financial Enter-

prises

The Financial Statements Act does not apply to financial enterprises that are sub-

ject to the Danish Financial Business Act and any executive orders issued under

that Act.

5 EXCHANGE AND INVESTMENT CONTROL

No Danish exchange control permit is required for the acquisition of a company or

a business in Denmark.

Acquisition

Restrictions

There are no general restrictions on foreign acquisitions of Danish enterprises, or

on domestic mergers and acquisitions, although restrictions do apply in respect of

certain industries such as the defence industry.

Furthermore, any natural or legal person who contemplates acquiring directly or

indirectly a qualified share of 10% (of the capital or voting rights) or more of a fi-

nancial enterprise or a financial holding company, whereby the person may exer-

cise a significant influence on the management of the financial enterprise, shall in

advance be approved by the Danish Financial Supervisory Authority. This further

applies in case of an increase of the holding of shares in such enterprises if the ac-

quisition results in the acquirer obtaining a holding in excess of thresholds of 20%

or 50% of the share capital or the voting rights of the company or if the financial

enterprise or the financial holding company becomes a subsidiary.

6 LABOUR MARKET

Danish Employ-

ment Regulation

Foreign investors will - regardless of whether setting up a new business or acquir-

ing an existing one - need an understanding of the structure of the Danish labour

market and the provisions and regulations governing the employment of personnel

in Denmark. In general, these rules are liberal compared to other European coun-

tries.

Some areas are subject to rules of law applicable to all categories of employees;

this is the case for holiday entitlements, exercise of options or subscription rights

for shares etc., pregnancy, maternity/paternity and parental leaves, right to em-

ployment contracts, equal treatment of men and women, and regulations on work-

ing environment etc. However, not all of these rules apply to employees with the

status of a member of the board of management.

With regard to hiring, notice periods, rights during and in connection with the ter-

mination of employment etc., the applicable rules will depend on the category of

employees involved. Salaried employees (white-collar workers) are subject to the

Danish Salaried Employees Act. Manual workers (blue-collar workers) are usually

covered by collective agreements, which in most cases are negotiated with the rele-

vant trade union(s).

19

Contrary to most other countries, the Danish labour market is based on widespread

autonomy - the so-called "Danish model". This Danish model implies that the social

partners enter into collective agreements on salary and employment conditions

which are normally applicable for two to four years. Collective bargaining agree-

ments only apply to employers who are members of an employers' association, or

who themselves directly have entered into collective bargaining agreements with a

trade union.

Consequently, the proportion of employers and employees belonging to an

employer's association or a trade union in Denmark is very high. A large number of

employers are members of special employers' associations, e.g. the Confederation

of Danish Industries ("Dansk Industri" or "DI") who again are members of the

Danish Employers Confederation ("Dansk Arbejdsgiverforening" or "DA").

Employees are often members of the relevant trade union, e.g. the United

Federation of Danish Workers ("Fagligt Flles Forbund" or "3F") or Danish

Metalworkers Union ("Dansk Metal"). Most trade unions are members of the Danish

Confederation of Trade Unions ("Landsorganisationen i Danmark" or "LO") dealing

with the labour movement's paramount tasks across all industrial sections and

coordinating the conduct of collective bargaining.

Act on Employees'

Legal Status on

Transfer of Under-

takings

In a transfer of assets, the purchaser of an undertaking is obligated to accept and

continue the existing salary and employment conditions of the employees (white-

collar and blue-collar workers) pursuant to the Act on Employees' Legal Status on

Transfer of Undertakings (implementing the EC Directive 77/187 as amended by EC

Directive 2001/23). Moreover, the purchaser shall within a certain time limit inform

the trade unions concerned if the purchaser does not want to ratify the collective

agreements comprehending the employees transferred. In addition, the Act on Em-

ployees' Legal Status on Transfer of Undertakings contains obligations on the part

of the transferor to inform and consult the employees concerned. Depending on the

circumstances such obligations also apply to the transferee in relation to its em-

ployees.

In an acquisition of shares, the legal entity does not change in relation to the em-

ployees. Consequently, the existing salary and employment conditions remain un-

changed with the new owner of the undertaking.

Act on Employ-

ment Contracts

Minimum requirements to the contents of an employment agreement are stipulated

by the Act on Employment Contracts (implementing EC Directive 91/533). If the

employer does not fulfil these requirements, the employee may be entitled to com-

pensation.

Information and

Consulting Proce-

dures for Employ-

ees in connection

with Acquisitions

and Mergers

Before a final decision on the transfer of assets or shares is made, there may - de-

pending on the circumstances - be an obligation to involve the employees in the de-

cision-making process.

In the event of a transfer of assets, the transferor shall, in reasonable time before

making the final decision to carry through the transfer, inform and consult the em-

ployees' representatives with regard to the contemplated transfer.

In case of a transfer of shares, it is basically not required to inform and consult the

20

employees' representatives. However, there might - depending on the circumstanc-

es - be a duty to inform and consult the employees.

In special cases, the employees' representatives can be imposed secrecy on all in-

formation that is disclosed to them. Information specifically provided in confidenti-

ality to the employees' representatives may not be disclosed to third parties.

The undertaking may omit to inform the employees' representatives in situations

where such information could be detrimental to the undertaking. This will depend on

a specific assessment in each case.

7 COMPETITION RULES

Danish

Competition Act

The Danish Competition Act of 1997 with amendments has aligned Danish

Competition Law with EC Competition Law to a large extent. Thus, provisions similar

to the prohibitions against anti-competitive agreements and against abuse of

dominant market positions in Art. 101 and 102 of the EC Treaty are found in the

Competition Act. EU competition law often interacts with Danish competition law.

The restraints of competition law may often have a significant effect on the

operation of an enterprise, and may as such also affect the valuation hereof. Due to

the limited size of the Danish market, even small and medium sized companies may

enjoy sufficient market power to be affected by the prohibition against abuse of a

dominant position and/or the restraints on exclusive dealings which on other

markets are relevant only for large companies. Although Danish law contains a

possibility of notifying agreements to the Danish Competition Authority, the

evaluation is in practise left to self-assessment and/or becomes actualised through

an investigation.

Due Diligence Thus, these restraints must be the subject of focus in a competition due diligence,

as the rules may affect the ability to continue established business practises or

preferred business relations. Violations of competition law entail punitive fines and

imprisonment as well as private enforcement through claim for damages, and it is

an important part of due diligence to assess the risk of survival of liability for past

infringements which may have been discontinued.

Danish Merger

Control

Certain mergers, acquisitions and joint ventures (hereinafter referred to as

"concentrations") are as a starting point subject to prior approval by the Danish

Competition Council. Provided one of the following two thresholds are met, a

concentration must be notified to the Danish Competition Authority and cleared by

the Danish Competition Council before it can be implemented:

In the last financial year preceding the concentration:

(a) The combined annual aggregate turnover in Denmark of all the undertakings

concerned is at least DKK 900 million (approx. EUR 120 million) and the

annual aggregate turnover in Denmark of each of at least two of the

undertakings concerned is at least DKK 100 million (approx. EUR 13 million),

or

21

(b) the annual aggregate turnover in Denmark of at least one of the undertakings

concerned is at least DKK 3.8 billion (approx. EUR 510 million) and the

aggregate annual worldwide turnover of at least one of the other

undertakings is at least DKK 3.8 billion (approx. EUR 510 million).

Turnover is to be calculated on a company group basis applying a wider definition of

the notion of the company group than is the case in other areas of corporate law.

The Danish provisions on merger control are based on the EU Merger Regulation

(Regulation 139/2004) to a large extent and are to this extent accordingly to be

interpreted in accordance with the EU provisions.

The merger control will not automatically encompass an evaluation of restrictive

agreements which form part of an acquisition agreement.

EU Merger Control Concentrations are subject to control at European Community level provided that

the thresholds defined in the EU Merger Regulation are exceeded. In such cases,

transactions must be notified to and cleared by the European Commission, and

merger control rules of the EC Member States (including Denmark) are not

applicable according to the "one stop shop" rule.

A more detailed description of Danish and EU merger control rules is set out in

Chapter 21.

8 MERGERS AND ACQUISITIONS

Acquisition

Methods

The acquisition of companies is typically carried out by means of either (i) the

acquisition of shares, (ii) the acquisition of assets, or (iii) a statutory merger.

The different types of transactions include the acquisition of both private and public

limited companies ("Private M&A") or the acquisition of listed companies ("Public

M&A"). Listed companies are often delisted following an acquisition ("P2P" or "take-

private" or "going-private" transactions). Transactions include management buy-

outs ("MBO") or management buy-ins ("MBI") and transactions in the Danish

market carried out by private equity funds are usually carried out as leveraged buy-

outs ("LBO").

Share or Asset

Acquisitions

Most transactions are share acquisitions rather than asset acquisitions. The type of

definitive transaction documents depends on the transaction and the parties'

negotiations. The purchase of a non-listed limited company (Private M&A) is usually

subject to a sale and purchase agreement between a purchaser and the seller(s)

whether in a share or asset acquisition together with ancillary documentation, as

required. If the target company is listed, definitive transaction documents may

include a share purchase agreement with majority shareholders (possibly on an

irrevocable basis), agreements with the target as well as the public tender offer

document.

There is no special law or regulation regarding the contents of definitive

agreements in connection with the acquisition of the shares or the assets of a

company. The Danish Sale of Goods Act applies to the acquisition of shares or

22

business assets. The Sale of Goods Act is, however, considered by most

practitioners to be wholly inadequate for the acquisition of the shares or business

assets of a company. Therefore, it is customary that the agreement for the sale and

purchase of shares or business assets comprehensively regulates the parties' rights

and obligations.

Definitive

Agreements

In relation to Private M&A transactions in Denmark, definitive agreements (share

purchase agreement or otherwise) are typically according to international standards

and may include conditions such as approval by the relevant competition

authorities, material adverse change, specific conditions to the transaction,

extensive warranties that depend on the parties' negotiations together with any

specific indemnifications required on the basis of due diligence and/or general

indemnifications, e.g. tax or environment, as well as provisions on limitation of

liability (if any), other covenants, boilerplate provisions, etc.

In Public M&A transactions there may or may not be a purchase agreement,

typically depending on whether there is a major or a majority shareholder(s) in the

listed company. If so, the purchase documentation may be similar to the

documentation in the private transaction, either in the form of a direct purchase

from the majority shareholder or in the form of a conditional share purchase

agreement (or irrevocable undertaking to accept the subsequent mandatory public

offer). The scope of warranties, indemnifications and any limitations depends on the

parties' negotiations. In addition, in public offers which have beforehand been

agreed and negotiated with the board of the target company, an agreement is

normally entered into between the offeror and the target company regarding so

called "no-shop" provisions and an obligation for the target's board to recommend

the offer and possibly warranties that terminate together with settlement of the

public tender offer.

Due Diligence In connection with an acquisition or merger, the purchaser (or both parties) will

usually carry out extensive due diligence investigations with respect to legal,

accounting, tax, environmental, commercial and technical matters. Due diligence

and access to information is usually subject to confidentiality, most commonly

regulated in a confidentiality agreement between the contemplated purchaser(s)

and the seller (and possibly the target company). Confidentiality undertakings

generally follow international M&A standards.

Statutory Mergers A statutory merger including a Danish public limited company follows the conclusion

of a joint merger plan (a merger agreement) prepared by and entered into by the

boards of the merging companies, which merger plan is filed with the Danish

Business Authority. A statutory merger may involve either the absorption of the

assets and liabilities of the target company by the acquiring company in connection

with the dissolution of the target, or the incorporation of a new limited company by

way of the merger between two or more existing companies (which existing

companies will automatically be dissolved upon the merger). The applicable

procedure is prescribed by the Companies Act. Assets and liabilities are as a

general rule subject to statutory succession; however, there are exceptions, see

further below.

The board of each of the companies involved must prepare a report for the

shareholders explaining the terms of and the reasons for the merger, unless the

23

shareholders unanimously decide otherwise.

Unless the shareholders unanimously decide otherwise, independent valuation

experts must prepare a written opinion on the merger plan, including a statement

as to whether the consideration for the shares in a discontinuing company is

reasonable and factually based. Further, unless otherwise unanimously decided by

the shareholders, the independent valuation experts must submit a statement as to

whether the creditors in the involved companies are expected to be sufficiently

secured after the merger.

Provided that the valuation experts have stated that the claims of the creditors in

the involved companies are expected to be sufficiently secured after the merger, all

assets and liabilities of the dissolved company, including contingent liabilities, will

automatically be transferred to the continuing company, unless a specific contract

contains a change of control-clause.

Approval of

Merger

Where, as a result of the merger, any company involved is to cease business, the

merger must be approved by the shareholders of such company in the manner

required for an amendment of the articles of association (described above under

"Regulation of Public Limited Companies"). If a company involved in a merger is to

continue its existence, it is sufficient for the merger to be approved by the board,

provided that no amendments to the articles of association of the continuing

company (except for adoption of the dissolved company's name and secondary

names as new secondary names for the continuing company) will be made as a

result of the merger. However, holders of 5% or more of the share capital of the

company (or such lower percentage as has the right to request a general meeting

under the company's articles of association) may demand that the decision on the

merger be adopted by the general meeting. The merger will become effective when

any claims for compensation by dissenting shareholders in the dissolved company

and any claims by creditors permitted under the Companies Act, have been satisfied

or secured. Subject to a right in certain circumstances to receive compensation,

dissenting shareholders will be bound by a merger plan which has been duly

approved by the companies involved and have no right to be bought out or

redeemed for cash.

Cross-border

Merger

Directive 2005/56/EC concerning cross-border mergers has been implemented into

Danish legislation. This implementation allows cross-border mergers between a

Danish company and a company domiciled in another EU Member State. The

Directive was passed to comply with the need for cooperation and redistribution

between companies with limited responsibilities domiciled in different EU Member

States and EEA States.

National Danish law and regulations apply with respect to the Danish company

involved in the cross-border merger.

A cross-border merger with a non-Danish company can be made with companies of

other EU or EEA States.

Companies affect-

ed by the new

Cross Border Pro-

The provisions on cross-border mergers apply to public limited companies (A/S), as

well as private limited companies (ApS). The Minister of Business and Growth has

been authorised to implement provisions on cross-border mergers for commercial

24

visions foundations, but this authorization has not yet been used.

Procedures The provisions governing the procedures for mergers between Danish companies

also apply to cross-border mergers, with the necessary adjustments and with a few

additional requirements in order to protect the shareholders, creditors and

employees of the companies involved. Consequently, a joint merger

agreement/merger plan must be prepared by the boards of the merging companies.

In addition, the board of each of the companies involved must prepare a report for

the shareholders explaining the terms of and the reasons for the cross-border

merger. Finally, independent valuation experts must prepare a written opinion on

the merger plan, including a statement as to whether the consideration for the

shares in a discontinuing company is reasonable and factually based. The

independent valuation experts must also submit a statement as to whether the

creditors in the involved companies are expected to be sufficiently secured after the

merger. If all shareholders in the companies involved consent thereto, the report by

the independent valuation experts on the merger plan (including the consideration)

and the statement relating to the creditors will, however, not be required.

Provided that the valuation experts have expressed in their statement that the

claims of the creditors in the involved companies are expected to be sufficiently

secured after the merger, all assets and liabilities of the dissolved company,

including contingent liabilities, will automatically be transferred to the continuing

company, unless a specific contract contains a change of control-clause.

The majority required in a Danish company to adopt a cross-border merger is the

same as the majority required to adopt a merger between Danish companies, cf.

above.

Protection of the

Shareholders

The shareholders who have opposed to the cross-border merger at the general

meeting adopting such merger may claim that the company redeem their shares, if

such claim is made in writing within four weeks from the general meeting.

Rules on Employ-

ee Representation

One of the challenges when drafting the Directive 2005/56/EC was to ensure that

the employees did not lose their representation right as the result of a cross-border

merger by being merged into a different country's jurisdiction. The solution has

been to sustain the national provisions on employee representation, if they provide

the same degree of representation as the employees had prior to the merger. As

mentioned under section 2 of this Introduction, the employees of an A/S, with an

average of at least 35 employees during the previous three years, are entitled to

elect from amongst themselves a number of members of the board - up to one third

of the total numbers of board members and no less than two members. This level of

representation of the employees in a Danish company has to be maintained after

the cross-border merger, unless the degree of representation in the legislation

governing the other company involved in the merger provides a higher degree of

representation.

The general meeting may make the adoption of a cross-border merger subject to

subsequent adoption of the guidelines laid down in respect of employee

representation.

25

The European

Company

A different method of merging two companies, which have their domiciles in

different EU Member States, is by creating an SE-company. This was made possible

by the passing of the Council Regulation (EC) No 2157/2001 on the Statute for a

European Company (SE).

Creating a SE-

company

An SE-company can be created by:

Merging companies from different EU Member States.

Creating an SE holding company.

Creating a joint SE subsidiary between companies governed by the laws of

different Member States.

Transforming a public limited liability company with a registered office and

head office within the European Union into an SE without entering the

company into liquidation, provided it has a subsidiary in a Member State

other than that of its registered office.

Minimum Share

Capital

The SE itself must take the form of a company with a minimum capital of EUR

120,000 (fully paid-up) to ensure that the company has sufficient assets without

making it difficult for small and medium-sized undertakings to form an SE.

Companies with

Non-EU Head Of-

fices

A company, the head office of which is not in the Community, may be allowed to

participate in the formation of an SE provided that the company (i) is formed under

the laws of a Member State, (ii) has its registered office in that Member State and

(iii) has a real and continuous link with a Member State's economy according to the

principles established in the 1962 General Programme for the abolition of

restrictions on freedom of establishment. Such a link exists in particular if a

company has an establishment in that Member State and conducts operations

therefrom. The SE may transfer its registered office to another Member State. Such

a transfer shall not result in the winding up of the SE or in the creation of a new

legal person.

European Eco-

nomic Interest

Groupings

Council Regulation No. 2137/85 on European Economic Interest Groupings (EEIG) is

directly applicable in Denmark. Consequently, any such entity may choose to have

its registered domicile in Denmark.

9 PUBLIC TAKEOVERS

Stake-building

and Disclosure

Before opening negotiations with controlling shareholders in a target company listed

or admitted to trading on a regulated market, a potential acquirer may wish to

acquire a substantial interest in the target by purchasing shares in the market.

Substantial shareholdings must be publicly disclosed, as described below. Disclosure

of a substantial acquisition of shares in a target company could have the effect of

pushing up the target company's share price, so that the acquisition of further

shares in the market becomes more expensive.

The Major Share- Pursuant to the Companies Act (Chapter 3) and The Major Shareholders Order

26

holders Order (Chapter 10), any acquirer whose shareholding in a company reaches 5% of the

share capital or voting rights, is required to immediately notify the company and, if

the company is listed, the Danish Financial Supervisory Authority of that fact.

Shareholdings in companies controlled by the acquirer must be aggregated for this

purpose. Interests of 5% or more must be notified immediately by the acquirer to

the Target company and to the Danish Financial Supervisory Authority, if the

company is listed, and within two weeks if the company is unlisted. The same apply

if a subsequent variation in a notified shareholding results in the shareholding

reaching, or no longer reaching, thresholds of 5%, 10%, 15%, 20%, 25%, 50%,

90%, 1/3, 2/3 - or 100% if the company is unlisted - of the share capital or the

votes.

Companies receiving notifications of major shareholdings are required to enter the

details in a special register, and listed companies shall immediately publish the

notification to the market. Information shown in this register will include details of

any bearer shares held by the shareholder concerned. The register is open for

inspection by public authorities, and the company's shareholders, board and

employee representatives. In addition, any other person may obtain a transcript of

the special register by applying to the company in writing. Failure to comply with

the notification requirements is punishable by fine. It follows that an acquirer will

be able to obtain details of the substantial shareholders in the target. However,

information on significant increases in the acquirer's own shareholding will in

consequence also be publicly available.

A company's general share register may, if this is provided for in the articles of

association, be open to shareholders, but is not open to public inspection. Listed

companies and state-owned enterprises, however, shall further disclose in the

annual report the exact ownership interest or voting share for any party holding

shares in the enterprise if the voting rights attached to the shares amount to a

minimum of 5% of the voting rights of the share capital, or their nominal value

amounts to a minimum of 5% of the share capital, but not less than DKK 100,000.

Publicly available

Information

Danish companies are required to prepare financial statements/reports each year

and file these with the Danish Business Authority where they are open to public

inspection. As a general rule these financial statements must be audited. In

addition, the articles of association of all companies and the names and addresses

of the directors, managers and auditors are registered with the Danish Business

Authority. A complete transcript from the Danish Business Authority, available on

any limited company, also includes historical registrations, e.g. change of directors,

auditors or changes to the articles of association. Shareholders' agreements are not

available from the Danish Business Authority, but may be available if disclosed to

NASDAQ OMX Copenhagen A/S. In view of the ability of Danish companies to issue

shares with differing voting rights and to restrict the number of votes exercisable

by single shareholders, it will be important to carefully consider the articles of

association of an intended target company to discover potential obstacles to an

acquisition. Further information can be obtained from other sources, including

privately published directories, credit information agencies, and the trade press.

Other sources of publicly available information include the company's website, the

land register, the register of persons (where other rights besides rights over land

may be registered, e.g. liens in cars), the patent and trademark registrations, the

Danish Financial Supervisory Authority for permissions and the local municipality for

27

environmental pe