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Danish FDI screening legislation

For a transaction to be subject to the requirement for mandatory prior authorisation, the transaction must be concluded by a foreign investor.

Foreign investors may be:

• Foreign (non-Danish) citizens.
• Companies not domiciled in the Kingdom of Denmark (including Greenland and the Faroe Islands). This also applies to foreign companies with permanent premises in Denmark.
• Companies domiciled in Denmark if the company is a subsidiary or a branch of a company domiciled outside the Kingdom of Denmark.
• Companies domiciled in Denmark if a foreign citizen or a company domiciled outside the Kingdom of Denmark has control of or significant influence over the Danish company.

Furthermore, the rules apply to national authorities and government bodies, including public institutions and state-owned investment funds, and non-profit associations, non-profit-making funds and similar legal entities, outside the EU and EFTA, that make foreign direct investments in or enter into special financial agreements with companies domiciled in Denmark.

For special financial agreements, the mandatory authorisation requirement only applies if the foreign contracting party, whether being a person or entity, is from outside the EU and EFTA.

The assessment of whether a person or entity qualifies as a foreign investor is made on a case-by-case basis and requires careful analysis of the full ownership and control structure behind the proposed transaction.

For a transaction to be subject to the requirement for mandatory prior authorisation, the transaction must meet certain qualifying criteria, depending upon whether the transaction concerns a foreign direct investment or a special financial agreement.

Foreign direct investments

For foreign direct investments the qualifying criterium is that the foreign investor must intend to acquire a qualifying holding in the Danish target company.

A qualifying holding is defined as direct or indirect possession of or control over at least 10 percent of ownership shares or voting rights or equivalent control by other means.

The authorisation requirement is also triggered if a foreign investor intends to increase an existing holding to reach or exceed the thresholds of 20 percent, a third, 50 percent, two thirds or 100 percent of ownership shares or voting rights in the Danish company.

When calculating ownership shares or voting rights, shares from group-affiliated companies or closely related people shall be included, as well as subscription rights and call options for shares that are currently exercisable or convertible.

The calculation of indirect interests follows the same principles as those used for determining beneficial owners — the interest percentage of the ultimate foreign investor is multiplied with the interest percentage of any intermediate companies.

The authorisation requirement also applies to intra-group transactions if the internal restructuring results in changes to a foreign investor's holding of ownership shares or voting rights, so it reaches or exceeds the thresholds listed above.

Asset deals may also be caught by the authorisation requirement if the transaction concerns all or a substantial part of the Danish company's assets, or if it entails the foreign investor obtaining control of or significant influence over the Danish company.

Special financial agreements

Two qualifying criteria must be met for an agreement to be characterised as a special financial agreement:

1) The agreement must fall within one of the following three agreement types:

• A joint venture agreement for research and development.
• A supplier agreement, i.e. an agreement for the supply of raw materials, products, facilities, semi-finished products and components, including software.
• An operation or service agreement, i.e. an agreement for the operation or maintenance of buildings, facilities, installations or systems.

2) The agreement must give the foreign investor control of or significant influence over the Danish company or entity.

The Danish Investment Screening Act and the executive orders issued pursuant thereto further specify when a specific agreement is considered to give a foreign investor control of or significant influence over a Danish company in respect of each type of agreement.

The mandatory authorisation requirement is only triggered if the Danish target company operates within particularly sensitive sectors and activities, as defined in the Danish Investment Screening Act and the executive orders issued pursuant thereto.

The particularly sensitive sectors and activities fall within five main categories:

• Companies in the sector of defence.
• Companies in the field of IT security functions or the processing of classified information.
• Companies producing dual-use items as defined in article 2(1) of Regulation (EU) 2021/821.
• Companies within other critical technology.
• Companies within critical infrastructure.

1: Companies in the defence sector

Companies within the defence sector include:

• Companies and entities which develop or produce weapons, war material or other technology for military use on the Common Military List of the European Union.
• Companies and entities not covered by no. 1 and that provide services to the Danish Defence of particular importance to the operations of the Danish Defence.

2: Companies in the field of IT security functions or the processing of classified information

Companies in the field of IT security functions or the processing of classified information include:

• Companies and entities that either themselves or as subcontractors develop or produce IT products and components used to protect classified systems or information, or
• Companies providing products or services for the processing of classified information.

3: Companies producing dual-use items

Companies producing dual-use items include all companies producing products covered by Annex 1 to Council Regulation (EC) No 428/2009, as amended.

4: Companies within other critical technology

Companies within other critical technology include companies and entities that develop or manufacture the following technologies, when the technology is not developed or produced for the purpose of a widely available consumer product (including toys and products for home use):

• Artificial intelligence and machine learning for autonomous vessels, human imitation, analysis of positioning data and biometric identification.
• Advanced industrial robot technology, including for production robots or for use in the healthcare sector, as well as advanced drone technology.
• Semiconductors for use in integrated circuits, including technologies that support their production.
• Technologies for the protection of cyber and information security with regard to accessibility, integrity or confidentiality in IT systems, as well as defence against IT attacks.
• Space technology for launching satellites, personnel and more, as well as communication technology that support this.
• Technologies for industrial energy storage, energy conversion and energy transport.
• Quantum technology in connection with quantum computers, quantum sensors, quantum cryptography and quantum communication.
• Nuclear technology, excluding products for use in the healthcare sector.
• Nanotechnology, including advanced graphene materials.
• Biotechnology in synthetic biology.
• 3D printing for the manufacture of components for industrial use.

5: Companies within critical infrastructure

Critical infrastructure is defined as infrastructure, including facilities, systems, processes, networks, technologies, assets and services necessary to maintain or restore socially important functions.

Companies within critical infrastructure include companies and entities which are necessary to maintain or restore the following socially important functions:

1) Energy sector:

• Production and storage capacity and transport and supply of electricity.
• Production, transport and storage of heating and cooling.
• Production and storage capacity as well as transport and delivery of gas.
• Production, storage and transport of crude oil as well as oil products for transport and the petrochemical industry.

2) Information and communication technology (ICT):

• Publicly accessible electronic communications networks and services.
• Central data storage (data storage centres).
• Satellite, radio and television transmission.
• Common public master data, including geodata, personal registration and central business registration.
• Domain name functions.
• News coverage covered by a public service obligation under the Danish Radio and Television Broadcasting Act.
• Central public digital identification and communication.
• IT and communication solutions to support crisis preparedness.
• Classified government communication.
• Closed communication networks and services between authorities.

3) Transport:

• Central traffic control units within public transport, passenger and freight transport (road, rail, air and sea).
• Central ports, fixed links, airports, train stations, road and rail networks, combined terminals and transport centres as well as metro and light rails.
• Central monitoring units and units for infrastructure maintenance (bridges, tunnels, train stations, airports, etc.).
• Hydrographic surveying.
• Post and courier services.

4) Contingency planning and civil defence:

• Alarm and alert services.
• Fire and rescue services.

5) Healthcare:

• Hospital system.
• Pre-hospital care.
• Monitoring and warning of infectious diseases.
• Purchase, storage, distribution and supply of vaccines.
• Purchase, storage, distribution and supply of protective equipment and equipment for testing to the healthcare and nursing care sector in connection with epidemic/pandemic management.
• Production, registration, distribution and monitoring of prescription drugs.

6) Drinking water and food:

• Extraction, production, storage, control and supply of clean drinking water and monitoring of groundwater.
• Monitoring and control of food safety with the exception of businesses' own control.

7) Wastewater and waste disposal:

• Wastewater management and treatment.

8) Finance and economics:

• Payment solutions and financial market infrastructures, including clearing and settlement of payments and securities trading.
• Banking and insurance.
• Marketplaces and Central Securities Depositories (CSDs).
• Joint data centres.

9) Meteorology:

• Meteorological service, advice and warning for society, defence, contingency planning and civil aviation with knowledge and data about the weather, the climate and the sea.

10) Exercise of public authority in general:

• Systems for holding elections.
• Support functions for law enforcement, crime protection and police preparedness (communication, logistics and IT).
• Support functions for the criminal case chain and execution of sentences (logistics etc.).

11) Interdepartmental crisis management:

• Supporting functions for interdepartmental and coordinating crisis preparedness and crisis management within the government.