On 16 May 2013, the Danish Parliament adopted a number of amendments to the Companies Act. The most important amendments are: (i) The possibility of forming an entrepreneurial company (IvS) paying only DKK 1 as company capital, (ii) reduction of the capital requirement for private limited companies from DKK 80,000 to DKK 50,000, and (iii) introduction of a new chapter on cross-border transfer of a company's registered office. Further, the amendments include a number of technical and linguistic specifications.
Entrepreneurial company (ivs)
The new entrepreneurial company is subject to the rules on private limited companies of the Companies Act with the exception of a few special rules. The capital requirement for an entrepreneurial company is DKK 1, and the company is obligated to transfer 25 % of the profit each year to an undistributable reserve, until this reserve together with the company capital amounts to DKK 50,000. No dividend will be paid to the owner/owners, until the reserve accumulating the company's capital base amounts to minimum DKK 50,000 together with the company capital.
The general meeting may decide that the entrepreneurial company must be re-registered as a private limited company if the company capital and the reserve amount to minimum DKK 50,000 at the time of the decision.
Reduction of the capital requirement for private limited companies
The capital requirement is reduced from DKK 80,000 to DKK 50,000 to attract companies and increase the number of company formations.
The reason for the reduction is that the existing capital requirement is of such size that it nevertheless constitutes an illusion of security for the company's creditors. The primary security for the company's creditors must be based on the executive board's responsibility for ensuring that the company's capital resources from time to time are sufficient compared to the company's operations.
At the same time, it is now possible to postpone payment of a share premium upon formation or in case of a capital increase. It is therefore possible for owners of private limited companies to pay only 25 % of the share premium.
In public limited companies, a share premium is still to be paid with its full nominal value upon formation and capital increases, and the capital requirement of DKK 500,000 is also not affected by the amendments.
As a consequence of the amendments, a chapter will be added to the Companies Act on the transfer of companies' registered offices across borders. These rules are very similar to the rules on cross-border mergers.
The amendments also involve abolishment of the corporate form S.M.B.A. (companies with limited liability) regulated by the Act on Certain Commercial Undertakings. It will therefore not be possible to form an S.M.B.A. after 1 January 2014.